Starter – or pre lesson task Investigate examples of barriers to entry

Lesson Objectives All students will consider the effect of the degree of competition on market price and output Most students will be able to understand the implications of barriers to entry and contestability to levels of competition Few students will understand the role of the government in breaking down barriers to entry in some markets.

The spectrum of competition - recap Monopoly Single producer in market Perfect Competition No producer has market power Imperfect Competition Strong competition but producers still have an element of market power

Competitive markets and easy entry Markets are most competitive when new businesses can easily join in Costs of starting business are low and no restrictions on entry High profits in market would quickly attract new entrants and profits would be competed down to minimum to stay in business Normal profit just significant to keep producer in the market. If profits fall below this level, costs to produce and sell product won’t be covered

Contestability The ease with which firms can enter and leave the market

Task Discussion point pg7

Barriers to entry Sunk costs Legal barriers Scale of existing firms (economies of scale) Branding of existing firms Intellectual property rights Required levels of R&D Required levels of capital Predatory pricing rom existing rivals

task Show your understanding pg8

HWK Oligopoly is next – examples – pros and cons for our economy of oligopoly – think winners and losers