In a Contestable Market

question 80

Multiple Choice

In a contestable market,

• A) there is always price discrimination.
• B) there are high barriers to entry.
• C) the firm in the market usually earns a large economic profit.
• D) the firm in the market may play an entry- deterrence game.

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Definitions:

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specific time frame.

Government Policy

The set of laws, guidelines, regulations, and actions adopted by a government to influence economic or social outcomes within the country.

Price Control

Government-imposed limits on the prices that can be charged for goods and services, typically used to curb inflation or prevent shortages and surpluses.

Price Floor

A government or regulatory minimum price set above the equilibrium price, preventing market forces from reducing prices below that level, often applied to agricultural products.