The relevant market structure under deregulation is described by a theory which substitutes potential competition for the active participation of many sellers. What is this theory called?
A) the law of supply and demand
B) marginal utility
C) monopolistic competition
D) contestable markets

Question

The relevant market structure under deregulation is described by a theory which  substitutes potential competition for the active participation of many sellers. What is this theory called?
A) the law of supply and demand
B) marginal utility
C) monopolistic competition
D) contestable markets

Quizplus · Accepted Answer

The theory of contestable markets describes a market structure where the threat of potential competition influences the behavior of the existing firms, even if the market does not have a large number of active competitors. This theory suggests that markets can be competitive when there are low barriers to entry and exit, allowing for potential competition to discipline the market without the need for a large number of firms actively participating.

The Relevant Market Structure Under Deregulation Is Described by a Theory