A contestable market is
A. An imperfectly competitive situation that is subject to entry.
B. An imperfectly competitive situation with high barriers to entry.
C. A market with only one producer.
D. A perfectly competitive market.
Answer: A
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Which of the following examples best describes the Law of Demand?
A) When John's income doubles, his telephone bill also doubles. B) When the price of bread doubles, John's consumption of bread halves. C) When the price of watches increases, a local manufacturer starts offering more watches for sale. D) When a new anti-tobacco commercial is released, the consumption of tobacco products decreases sharply.
If demand increases in a perfectly competitive market,
a. the market price will fall b. firms already in the market will supply more output c. new firms will enter the market d. the short-run market supply curve will shift to the right e. each firm's marginal cost curve will shift to the right