How is a contestable market similar to a perfectly competitive one?
What will be an ideal response?
A contestable market is similar to a perfectly competitive market in that there is free entry and exit. As a result, the active firm(s) cannot earn an economic profit in the long-run because potential entrants will enter any time economic profits exceed zero.
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A firm's implicit costs are
a. its maintenance costs b. its paid-out costs of production c. its main source of executive costs d. irrelevant to the determination of economic profit e. opportunity costs of production that do not involve money outlays
Which of the following is true of the marginal revenue for a monopolist?
a. As a monopoly increases production, marginal revenue decreases b. As a monopoly increases production, marginal revenue increases. c. As a monopoly increases production, marginal revenue remains constant. d. As a monopoly increases production, marginal revenue first increases and then remains constant.