If a Contestable Market Has Only One Seller, Which of the Following

question 71

Multiple Choice

If a contestable market has only one seller, which of the following will keep the seller from producing inefficiently and charging a price that generates long-run economic profits?

• A) government regulations
• B) low costs of entry into and exit from the market
• C) substantial economies of scale that provide a competitive advantage to large firms in such markets
• D) the threat of a government takeover of the firms in these markets

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Definitions:

Civil Charge

An allegation or accusation in a civil lawsuit as opposed to a criminal charge, dealing with disputes between individuals or organizations.

White-Collar Crime

White-collar crime refers to financially motivated, nonviolent crimes committed by business and government professionals.

Strict Liability

A legal doctrine holding individuals or entities liable for damages their actions cause, regardless of fault or intention.

Sells Cigarettes

A phrase that denotes the action of offering cigarettes for purchase.