A Contestable Market Is One in Which

question 127

Multiple Choice

A contestable market is one in which

• A) one or a small number of firms operate, but they face competition from potential entrants.
• B) if a firm cuts its price, all other firms will follow the price cut.
• C) a group of firms enter into an agreement to restrict output and raise prices.
• D) one dominant firm sets the market price, and all other firms are price takers.

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