Market structures (OCR A-Level Economics): Quizzes
📚Quizzes
Practise the questions
11 questions from this quiz
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Practise the questions
11 questions from this quiz
What defines a contestable market?
What defines a contestable market?
No barriers to entry or exit
Who proposed the theory of contestable markets?
Who proposed the theory of contestable markets?
William Baumol
What determines firm behaviour in contestable markets?
What determines firm behaviour in contestable markets?
Potential competition
What are sunk costs?
What are sunk costs?
Costs that cannot be recovered
What do firms have in a perfectly contestable market?
What do firms have in a perfectly contestable market?
Perfect knowledge
What is 'hit-and-run entry'?
What is 'hit-and-run entry'?
Firms enter, profit, then exit quickly
What outcomes result from contestable markets?
What outcomes result from contestable markets?
Lower prices and higher quality
Where does productive efficiency occur?
Where does productive efficiency occur?
At minimum point on curve
What condition defines allocative efficiency?
What condition defines allocative efficiency?
Why must firms minimize costs in contestable markets?
Why must firms minimize costs in contestable markets?
To prevent entry by new competitors
How do few firms behave in highly contestable markets?
How do few firms behave in highly contestable markets?
Like competitive markets