Which of the Following Statements Is TRUE About Contestable Markets

question 64

Multiple Choice

Which of the following statements is TRUE about contestable markets?

• A)There are significant barriers to entry.
• B)Firms earn large economic profits.
• C)Each firm faces a perfectly elastic demand.
• D)There are few firms in the industry.
• E)None of the above.

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Definitions:

Negotiable

Referring to the ability of the terms of an agreement, document, or financial instrument to be adjusted or transferred in accordance with all parties' consent.

Certificates of Deposit

Financial instruments issued by banks that offer a fixed interest rate in exchange for keeping deposited funds untouched for a predetermined period.

Nonnegotiable

Pertaining to a term, condition, or instrument that cannot be altered or bargained upon, often legally or contractually fixed.

Accelerated Payment

A payment method that allows for early settlement of a debt, often reducing the amount of interest.