A Contestable Market Is Similar to a Perfectly Competitive Market

question 145

Multiple Choice

A contestable market is similar to a perfectly competitive market in that there

• A) can be only one firm in the market.
• B) will be no entry if the existing firm earns an economic profit.
• C) are barriers to entry.
• D) are no barriers to entry.

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Definitions:

Market Share

A firm’s fractional share of the relevant market.

Antitrust Violation

An action or behavior that violates laws designed to promote competition and protect consumers and the market from unfair business practices, such as monopolies or cartels.

Flower Shops

Retail establishments that sell flowers, floral arrangements, and other related items.

Robinson-Patman Act

A U.S. antitrust law passed in 1936 to protect against pricing discrimination and predatory pricing to encourage fair competition.