Asked by
Jaime Karagosian
on Dec 12, 2024
Verified
In a market that is contestable, but has only a few sellers, the
A) threat of new entrants will prevent prices from rising above the competitive level.
B) producers will be able to charge prices that are high enough to produce long-run economic profits.
C) producers will not face new competition because the barriers to entry are high.
D) market will never be expected to come close to the competitive result.
Threat Of New Entrants
The potential challenge posed by a new competitor entering an industry or market.
Contestable
Pertaining to a market situation where costs of entry and exit are low, allowing for potential competition to exist even if the market is held by a few companies.
Competitive Level
indicates the intensity of competition within a market, influencing firms' strategies and market outcomes.
- Discern the distinctions between contestable and competitive markets, especially in terms of barriers to entry and exit and their impact on market results.
Verified Answer
TH
Learning Objectives
- Discern the distinctions between contestable and competitive markets, especially in terms of barriers to entry and exit and their impact on market results.