Contestable Markets Tend to Arise When

question 128

Multiple Choice

Contestable markets tend to arise when:

• A) fixed costs are high.
• B) the threat of new firms entering the market is low.
• C) the incumbent firm does not control access to an important resource.
• D) government regulations are in effect.

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Definitions:

Write-Offs

A reduction in the value of an asset or earnings by the amount of an expense or loss, usually deemed uncollectible by any business; charges that are deemed uncollectible by any business.

Uncollectible Charges

Fees for goods or services provided that are not expected to be paid by the customer, often written off as bad debts by the business.

Retained Earnings

Profit accumulated over time by a company, after dividend payments to shareholders, which is reinvested in its business.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.