According to the Contestable Markets Theory

question 100

Multiple Choice

According to the contestable markets theory,

• A)even if an industry is comprised of a small number of firms, this is not sufficient evidence that the firms perform in a noncompetitive way.
• B)profits cannot be zero in an industry if the number of sellers in the industry is small.
• C)if a market is contestable, inefficient producers are more likely to survive than if the market is not contestable.
• D)b and c
• E)a, b, and c

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Definitions:

Aggregate Demand

The aggregate request for every product and service within an economy at a specified time and price point.

Wages

Monetary compensation paid by an employer to an employee in exchange for work performed.

Long-Run Phillips Curve

A graphical representation suggesting that in the long term, there is no trade-off between inflation and unemployment, showing vertical at the natural rate of unemployment.

Unemployment Rate

The percentage of those in the labor force who are not working but are in search of employment.