Asked by
Raelin Hutchinson
on Dec 12, 2024
Verified
Which of the following is a characteristic of a contestable market?
A) long-run economic profit
B) many firms that are small relative to the market
C) high costs for entry and exit
D) minimum-cost production methods
Contestable Market
A market with free entry and exit, where a company's prices and outputs are constrained by the threat of competition from potential entrants.
Economic Profit
The offset between total financial inflow and all encompassing outgoings, covering both specified and unspecified expenses.
Entry And Exit
Refers to the capability of businesses to freely enter into or exit from markets based on regulatory, economic, and market conditions, impacting competition and market dynamics.
- Examine the differences in contestable and competitive markets, particularly focusing on the entry and exit barriers and the resultant market outcomes.
Verified Answer
AS
Learning Objectives
- Examine the differences in contestable and competitive markets, particularly focusing on the entry and exit barriers and the resultant market outcomes.