If a New Entrant (Or an Established Firm) Wants to Leave

question 81

Multiple Choice

If a new entrant (or an established firm) wants to leave a contestable market,

• A) all, or nearly all of, the invested capital values can be recovered.
• B) another firm will always enter to take its place.
• C) it must accept large losses in its capital investment, so it is unlikely to exit.
• D) its leaving will be contested by regulators in the market who seek to prevent exit.

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Definitions:

Personal Property Security Act

Legislation that provides a legal framework for the creation and registration of security interests in personal property (assets other than real estate) to secure payment or performance of an obligation.

Guaranteed

A promise or assurance, often backed by an entity or document, that certain conditions will be fulfilled or met.

Security Interest

A legal claim or right granted over an asset to secure the performance of an obligation, typically repayment of a loan.

Overages

Extra charges incurred when a project goes over its budget, often applied in construction, film production, or retail leasing contexts.