1
Q
Define economies of scale?
A
A fall in the long run average costs of a firm as output increases
2
Q
What is limit pricing?
A
A pricing strategy a monopolist may use to discourage entry. Keeps supernormal profits low
3
Q
What is contest ability?
A
Low barriers to entry making it contest able
4
Q
When does productive efficiency indicators occur?
A
The lowest point in the AC curve
5
Q
When does allocative efficiency occur?
A
P=MC
6
Q
What does a high concentration imply?
A
Few firms have a high market share
Economics Unit 3
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