In a Contestable Market There Does Not Always Need to Be

question 9

True/False

In a contestable market there does not always need to be actual competition to keep prices relatively low - just the threat of competitors entering the market.

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Definitions:

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent and salaries.

Net Income

The amount of profit remaining after all operating expenses, taxes, and interest have been deducted from total revenue.

Variable Cost

Charges that directly correlate with the amount of goods produced or the level of output.

Fixed Costs

Expenses that do not change with an increase or decrease in the number of goods or services produced, such as rent, salaries, and insurance.