A contestable market is one where:
A. there is a threat of entry.
B. there are no firms that threaten to enter the market.
C. firms already in the market cannot leave the market.
D. only one firm at a time can serve the market.
Answer: A
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Refer to the total revenue graph below. An increase in the quantity of product X demanded from 14,000 to 16,000 units implies that the price of product X was:
A. Reduced and the demand is elastic
B. Increased and the demand is elastic
C. Reduced and the demand is inelastic
D. Increased and the demand is inelastic
If there are large disparities in wage levels between countries, then
A) trade is likely to be harmful to both countries. B) trade is likely to be harmful to the country with the high wages. C) trade is likely to be harmful to the country with the low wages. D) trade is likely to be harmful to neither country. E) trade is likely to have no effect on either country.
Assuming peaches are a normal good and consumer incomes rise, producer surplus in the peach market:
a. increases. b. decreases. c. remains unchanged. d. equals the deadweight loss increase.
Suppose the economy is initially in long-run equilibrium and aggregate demand rises. In the long run prices
a. and output are higher than in the original long-run equilibrium. b. and output are lower than in the original long-run equilibrium. c. are higher and output is the same as the original long-run equilibrium. d. are the same and output is lower than in the original long-run equilibrium.