A Market with One or a Small Number of Firms

question 111

Multiple Choice

A market with one or a small number of firms but no barriers to entry is known as

• A) a perfectly competitive market.
• B) a natural monopoly.
• C) monopolistic competition.
• D) a contestable market.

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Definitions:

Incremental Revenue

The additional revenue generated from a specific action or decision, beyond what would have been generated without it.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Fixed Cost

A fixed cost is an expense that does not change with the level of goods or services produced by a business, such as lease payments or insurance premiums.

Sunk Cost

A sunk cost is a past expense that has already been incurred and cannot be recovered. Businesses cannot alter these costs with future decisions.