In a Market That Is Contestable, but Has Only a Few

question 54

Multiple Choice

In a market that is contestable, but has only a few sellers, the

• A) threat of new entrants will prevent prices from rising above the competitive level.
• B) producers will be able to charge prices that are high enough to produce long-run economic profits.
• C) producers will not face new competition because the barriers to entry are high.
• D) market will never be expected to come close to the competitive result.

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Definitions:

Stimulus Generalization

The tendency for the conditioned response to be evoked by stimuli that are similar to the stimulus to which the response was originally conditioned.

Higher-order Conditioning

A process in classical conditioning by which a stimulus that's associated with a primary conditioned stimulus also becomes a conditioned stimulus.

Stimulus Discrimination

The ability to differentiate between one stimulus and similar stimuli, ensuring that only the original stimulus triggers the conditioned response in classical conditioning.

Stimulus Discrimination

The ability to differentiate between similar stimuli and respond appropriately to each one.