Of the Following, the Best Example of Firm That Might

question 137

Multiple Choice

Of the following, the best example of firm that might operate in a contestable market is a

• A) cable TV company.
• B) wheat farmer.
• C) ship owner operating on a major waterway.
• D) private college operating in a state with many public colleges.

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Definitions:

Butter And Margarine

These are two types of spreads commonly used as alternatives to each other; butter is made from animal fat while margarine is made from vegetable oils.

Water And Lemons

This may refer to the economic theory illustrating the concept of asymmetric information, where sellers have more information about the product quality than buyers, as famously exemplified in Akerlof’s “The Market for Lemons.”

Cross-Price Elasticity

A measure of how the demand for one good responds to a change in the price of another good, reflecting substitutes or complements.

Demand

The quantity of a good or service consumers are willing and able to purchase at various prices during a specified time period.