A contestable market is one where:
A. there are infinitely many firms.
B. entry necessarily occurs.
C. there is the legitimate threat of entry.
D. firms can maintain the monopoly price.
Answer: C
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Which of the following properties is seen in a buy-sell transaction arranged by a pipeline?
a. Pipelines offer to resell gas to consumers even at a loss. b. Gas producers offer to sell gas to the pipelines at a discounted prices. c. Gas producers ration the amounts they supply to the pipelines. d. Pipelines evade the legal ceiling on their transportation charge by bundling the gas with transportation service.
Exhibit 4-3 Supply and demand curves
The market shown in Exhibit 4-3 is initially in equilibrium at E4. Changes in market conditions result in a new equilibrium at E3. This change is stated as a(n):
A. increase in supply and an increase in quantity demanded. B. increase in supply and a decrease in demand. C. decrease in supply and a decrease in quantity demanded. D. increase in demand an increase in supply.