All difficulties that businesses are likely to face when they are setting up
1 of 9
What are contestable markets?
Those that have low barriers to entry - new entrants can set up in business without having to invest serious amounts of capital
2 of 9
How can lack of finance be a barrier to entry?
Smaller businesses trying to enter the market will not be able to compete with big companies as economies of scale make large-scale production the most efficient and smaller businesses having to charge more to break even to fail if they don't have fu
3 of 9
When can a market be contestable even with big companies?
If the customer market is quite small as this makes entry easy because big businesses can't charge high prices
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What are some barriers to entry?
Product differentiation, branding and brand loyalty, start-up costs, intellectual property rights and R&D technology change
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What type of markets will high barriers to entry result in?
Oligopolies as they will have financial power
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Why are there major barriers to entry for natural monopolies?
Competition cannot actually reduce costs and prices?
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What impact will internal economies of scale have on cost and price?
It will cut production costs, which will reduce prices and make it easier for businesses to expand into new markets
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What impact will external economies of scale have on cost and price?
They can help start-ups where there are local facilities that benefit all producers
9 of 9
Other cards in this set
Card 2
Front
What are contestable markets?
Back
Those that have low barriers to entry - new entrants can set up in business without having to invest serious amounts of capital
Card 3
Front
How can lack of finance be a barrier to entry?
Back
Card 4
Front
When can a market be contestable even with big companies?
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