A Single Firm Selling Its Output in a Contestable Market

question 75

Multiple Choice

A single firm selling its output in a contestable market can raise its prices and

• A) insure higher profits.
• B) guarantee monopoly profits.
• C) give other firms the incentive to enter that market.
• D) keep other firms out of the industry with its market power.

Recognize the benefits of comparative advantage and the role it plays in international trade.

Describe the consequences of trade restrictions on consumer choice and market variety.

Understand the relationship between trade policies and consumer prices.

Analyze the effects of trade policies on government revenue.

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Definitions:

Activity-Based Costing (ABC)

Activity-Based Costing (ABC) is a costing methodology that assigns costs to activities based on their use of resources, offering more precise costing information.

Supplier Performance Index

This index assesses a supplier's efficiency by analyzing their delivery times, quality of goods, and adherence to contractual agreements, providing a comprehensive overview of their performance.

Suppliers

Entities that provide goods or services to another entity, typically in a supply chain context.

Break-Even Point

The point at which total sales match total costs, leading to no profits or losses.