A Contestable Market Is One in Which

question 107

Multiple Choice

A contestable market is one in which

• A) there is a competitive (normal) profit rate and few firms operating.
• B) the costs of entry and exit are high.
• C) each firm produces an identical product.
• D) the fixed costs of firms in the market are also sunk costs.

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Definitions:

S&P 500 Index

An American stock market index based on the market capitalizations of 500 large companies listed on stock exchanges in the United States.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenues, highlighting the impact of fixed versus variable costs.

Profits

The financial gain achieved when the revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

GDP

Gross Domestic Product, the total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period, acting as a broad indicator of economic activity.