For the Theory of Contestable Markets to Work,four Conditions Have

question 10

Multiple Choice

For the theory of contestable markets to work,four conditions have to be met: no barriers to market entry,no economies of scale present,consumer willingness to switch between carriers,and

• A) sellers and buyers of such small size that price or supply cannot be influenced.
• B) existing carriers prevented from responding to new entrants' lower prices.
• C) mutual interdependence between various sellers.
• D) no one seller controls a significant portion of the market.

---

Definitions:

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Average Annual Sales

Average annual sales represent the mean revenue a company generates per year over a specified period, commonly used to assess business performance and growth trends.

Credit Policy

Guidelines that a company follows to determine credit limits and terms for customers, which affects how and to whom credit is extended.

Cost Of Sales

This refers to the direct costs attributable to the production of the goods sold by a company, including material and labor costs.