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June 21, 2021

Discussion/ Microeconomic

General Questions

After watching the video clip from Forrest Gump, consider that Forrests good luck of being in the right place at the right time allowed him to operate as a monopoly. Typically, the fishing industry is a highly competitive industry where economic profits are rarely made in the long run. However, in a twist of fate, Forrests boat is the lone survivor after a hurricane washes ashore and destroys all the other shrimp boats.

Consider the barriers to entry facing potential competitors in Forrests monopoly market. The more contestable a market, the closer it will be to a perfectly competitive market, whereas the less contestable a market, the closer it will be to a monopoly.

What barriers to entry exist in other industries that allow certain firms to operate as a monopoly? Are these barriers contestable?

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