Which of the Following Statements Is TRUE About Contestable Markets

question 225

Multiple Choice

Which of the following statements is TRUE about contestable markets?

• A) There are significant barriers to entry.
• B) Firms earn large economic profits.
• C) Each firm faces a perfectly elastic demand.
• D) There are few firms in the industry.

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Definitions:

Amortized Cost

Amortized cost refers to the accounting practice of gradually writing off the initial cost of an asset over its useful life or the repayment period of a loan.

Equity Securities

Equity securities are financial instruments that signify an ownership interest in a company or entity and may provide income through dividends or the potential for capital gains.

Low Risk

Referring to investments, strategies, or situations that have a minimal chance of loss or failure.