Edexcel A Level · 9EC0 · Theme 3: Business behaviour and the labour market
3.4.7 Contestability
Everything you need for questions on contestability, in the words examiners reward. An interactive seven-step lesson goes with it.
What's on this sheet
- What makes a market contestable?
- Sunk costs
- Limit pricing in a contestable market
- Implications for firms
- Classic question: will the threat of entry make a monopoly act like a competitive firm?
- Side 2: practice tasks, where the marks go, and exam-style questions
- Separate answer key
The lesson in seven steps
- Price to keep rivals out
- Sort the changes
- How contestable is it?
- Contestability trainer
- The power of a threat
- Build the chain
- Exam practice
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