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Contestable markets Flashcards | StudBud

Explore/Contestable markets

Contestable markets are characterised by

Contestable markets

Contestable markets

10 terms·StudBud Administration·544 plays

#contestable markets

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Questions 10

Answers

1
Contestable markets
Are characterised by 'competition amongst the few'
Are monopolistic
May have very few or very many firms
Are perfectly competitive
2
Contestable markets are characterised by
Freedom of entry for new firms
Freedom of exit for incumbent firms
Freedom of entry and exit for firms
High barriers to entry and exit
3
Which of the following sectors is most likely to be contestable in the UK today
Hairdressers
Pharmaceutical companies
Nuclear energy generation
Sports footwear
4
Firms in contestable markets tend to have a lower price/higher output than monopolistic firms..
Promoting allocative efficiency
Promoting x- efficiency
Promoting dynamic efficiency
Reducing organisational slack
5
Contestable markets force firms to think very carefully about keeping costs down. This promotes
Dynamic efficiency
Productive efficiency
x-inefficiency
Allocative efficiency
6
Firms in contestable markets always produce
Highly differentiated products
Branded goods
Homogenous products
It doesn't matter
7
The potential for 'hit and run' tactics ensures that incumbent firms
Only make a normal profit
Can make long-run abnormal profit
Set price above unit cost
Have no incentive to stay in the market
8
Policies to promote contestability include the removal of all of the following, except
Artificial barriers to entry
The granting of long-term patents
CMA legislation
Licensing regimes for public broadcast TV
9
A firm in a contestable market, seeking to deter entrants, is most likely to set price
P4
P2
P3
P1
10
Examples of sunk costs include all of the following, except
Training costs
Corporate sponsorship
Non-specialist capital equipment
Promotional spending