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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