MYTUTOR SUBJECT ANSWERS

400 views

List and explain some ways in which a monopolistic firm can use it's lower costs as a barrier to entry.

Monopolistic firms often experience Economies of Scale which makes their average total costs lower than competitors. This can create significant abnormal profit and can create barriers through:

Predatory pricing: The firm may take advantage of their low costs of production by temporarily adjusting their price of output to be lower than their competitors, forcing them out of the market as they will lose their customers.

Research & Development: A firm with significant profits can invest in researching newer, better quality goods before patenting them. This makes their output more attractive than the competition which will reduce the incentive for new firms to compete.

Marketing and Advertising: The profts may also be used for large-scale advertising to capture a significant market share, forcing smaller firms to collapse in some cases whilst also disincentivising entry in the market from new firms.

Reubin B. GCSE Maths tutor, A Level Maths tutor, GCSE Economics tutor...

10 months ago

Answered by Reubin, an A Level Economics tutor with MyTutor


Still stuck? Get one-to-one help from a personally interviewed subject specialist

76 SUBJECT SPECIALISTS

£26 /hr

Ellen T.

Degree: Economics (Bachelors) - LSE University

Subjects offered:Economics, Physics+ 2 more

Economics
Physics
Maths
-Personal Statements-

“Hi! I study Economics at LSE. With previous tutoring experience, I am keen to provide genuine advice and create an engaging learning environment.”

£36 /hr

Gina J.

Degree: Economics with French (Bachelors) - Bristol University

Subjects offered:Economics, Spanish+ 2 more

Economics
Spanish
Maths
French

“Private tutor of Economics, Maths and French with six years of experience. I am passionate about teaching!”

£20 /hr

Dan W.

Degree: Economics and Accounting (Bachelors) - Bristol University

Subjects offered:Economics, Maths

Economics
Maths

“I achieved top grades whilst juggling cricket at a high level. I’ve tutored for Young Einstein Tuition & been a Peer Mentor to those facing personal issues”

About the author

Reubin B.

Currently unavailable: for regular students

Degree: Business Economics (Bachelors) - Exeter University

Subjects offered:Economics, Maths+ 1 more

Economics
Maths
Graphic Design

“ABOUT ME I am currently a student at the University of Exeter studying Business Economics. I have a keen interest in all aspects of economics with the passion to guide you through your course, and the hope to inspire the same enthusia...”

Trusted by schools

|  49 completed tutorials

You may also like...

Posts by Reubin

Explain how the diagram for a perfectly competitive firm demonstrates static efficiency.

List and explain some ways in which a monopolistic firm can use it's lower costs as a barrier to entry.

What is meant by an oligopoly being both interdependent and uncertain in their price strategies?

Why might a perfectly competitive firm make abnormal profit in the short run but only normal profit in the long run?

Other A Level Economics questions

The government has introduced an ad valorem tax on petrol. The likely effect is: A) Increase in sales of petrol B) Increase in carbon emissions from electric cars C) Increase in demand for bus travel D) Decrease in sale of electric cars

What are the effects on UK businesses after an increase in fuel prices?

Do only monopolies have monopoly power?

What are the possible effects of a decrease in the interest rate set by the central bank?

View A Level Economics tutors

We use cookies to improve your site experience. By continuing to use this website, we'll assume that you're OK with this. Dismiss

mtw:mercury1:status:ok