A Market Is Contestable If

question 80

Multiple Choice

A market is contestable if:

• A) it is dominated by a single firm.
• B) a competitor could credibly enter and take away business from the incumbent.
• C) competitors allege that the dominant firm is an illegal monopoly.
• D) prices are very high.

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Definitions:

Profit Margin

A financial metric used to evaluate the profitability of a business, calculated by dividing net income by sales.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and salaries, excluding the cost of goods sold.

Cost of Goods Sold

The direct costs attributed to the production of goods sold by a business, including materials and labor.

Net Sales

The revenue a company generates from sales after deducting returns, allowances for damaged or missing goods, and discounts.