A Contestable Market Is One in Which

question 199

Multiple Choice

A contestable market is one in which

• A) one dominant firm sets the market price, and all other firms are price takers.
• B) if a firm cuts its price, all other firms will follow the price cut.
• C) one or a small number of firms operate, but faces competition from potential entrants.
• D) a group of firms enter into an agreement to restrict output and raise prices.

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Definitions:

Current Ratio

A measure used to determine a company's potential to fulfill obligations due within one year by calculating the ratio of its current assets to its current liabilities.

Indicator Of Liquidity

Measures that indicate how easily a company can convert its assets into cash to cover short-term obligations.

Total Obligations

The sum of a borrower's current and long-term financial responsibilities.

Past Transactions

Completed financial activities or events that have occurred in the past and have been recorded in the accounting records.