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    So I was doing an economic unit 3 question the other day and it was asking
    'To what extent do you think this market is contestable?'
    I struggled with this question, any idea how I can answer this question?
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    It is basically asking about the barriers to entry / exit.

    Look at set-up costs, advertising by current firms, legal barriers, limit pricing and cost advantages in the given market.

    Though the actual answer will depend on what market you are talking about...
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    (Original post by dean01234)
    It is basically asking about the barriers to entry / exit.

    Look at set-up costs, advertising by current firms, legal barriers, limit pricing and cost advantages in the given market.

    Though the actual answer will depend on what market you are talking about...
    Am I looking to see how close that market is to a perfect market?
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    (Original post by dan94adibi)
    Am I looking to see how close that market is to a perfect market?
    No, the theory of contestable markets is that the threat of competition will make monopolies / oligopolies behave as if there is some competition, in order to keep out potential competition.

    A market is contestable if it is easy to enter ie a perfectly competitive market. However if there are lots of barriers to entry the market is not very contestable.

    But I would recommend reading through some textbooks, tutor2u or even the mark scheme (only if you are really stuck, and only a quick glance... Don't write your essay from it)
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    (Original post by dean01234)
    No, the theory of contestable markets is that the threat of competition will make monopolies / oligopolies behave as if there is some competition, in order to keep out potential competition.

    A market is contestable if it is easy to enter ie a perfectly competitive market. However if there are lots of barriers to entry the market is not very contestable.

    But I would recommend reading through some textbooks, tutor2u or even the mark scheme (only if you are really stuck, and only a quick glance... Don't write your essay from it)
    Thanks for your help.
    I'm 100% sure this will come up. I just want to prepared just incase if its in the data response question I choose.
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    (Original post by dan94adibi)
    I'm 100% sure this will come up.
    How do you know?
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    (Original post by CoolStoryBroo)
    How do you know?
    This is one of the examiners favourites. Its been there almost every year.
 
 
 
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