EconomicsToo

The contestable market theory is an economic theory that proposes that a market is competitive as long as it is easy for firms to enter and exit. According to this theory, even if there are only a few firms in a market, if it is easy for new firms to enter and existing firms to exit, the market will behave competitively. This is because the threat of new entrants and the possibility of existing firms exiting will provide an incentive for firms to keep prices low and quality high in order to remain competitive. Watch this video for an explanation of contestable markets for CIE A2 and all you need to know: Limit pricing is a common pricing strategy that involves setting prices at a level that is low enough to deter new firms from entering a market, but high enough to cover the costs of existing firms. Firms may use limit pricing in order to protect their market share and prevent new entrants from gaining a foothold in the market. Prices are set at ATC = AR when the market is perfectly co...

An oligopoly is a market structure in which a few firms dominate the industry. These firms have significant market power and can influence prices. In Malaysia, there are several industries that are considered oligopolies, including: The telecommunications industry: A few large firms, such as Maxis and Digi, dominate the Malaysian telecommunications market. The banking industry: A few large banks, such as Maybank, CIMB, and Public Bank, dominate the Malaysian banking market. The automotive industry: The Malaysian automotive market is dominated by a few large firms, such as Proton and Perodua. The media industry: A few large media firms, such as Astro and Media Prima, dominate the Malaysian media market. Oligopolies can have significant market power and can influence prices. They can also lead to less competition and potentially higher prices for consumers. It's worth noting that the level of concentration in an oligopoly can vary over time, as firms enter or exit the market and as m...