How Does Contestable Markets Theory Challenge Orthodox Market Structure Theory

question 142

Multiple Choice

How does contestable markets theory challenge orthodox market structure theory?

• A)Contestable markets theory argues that firms do not maximize sales; orthodox market structure theory argues that they do.
• B)Orthodox market structure theory places much greater weight than contestable markets theory on the number of firms in an industry as a major factor in determining a firm's behavior.
• C)Contestable markets theory emphasizes product differentiation; orthodox market structure theory does not.
• D)Contestable markets theory emphasizes nonprice competition; orthodox market structure theory does not.

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Definitions:

Peer Review

Rephrased: The assessment of an individual's work or performance by others who are of the same rank in a workplace or professional organization.

Panel Composed

A group of selected individuals brought together to discuss, investigate, or decide on a particular matter.

Organization

An entity comprising multiple people, such as a business or government agency, organized to achieve specific goals.

Arbitration

A form of alternative dispute resolution where an impartial third party, the arbitrator, makes a decision to resolve a dispute outside of court.