If a company is the sole U.S.producer of good X,the market may still be contestable because of all but which one of the following?
A)Foreign producers can provide good X to the U.S.market.
B)Many domestic firms can potentially begin production of good X.
C)New technology may threaten to make good X obsolete.
D)The presence of a government franchise.

Question

Quizplus · Accepted Answer

The presence of a government franchise would limit or exclude other firms from entering the market, making it less contestable. Therefore, if company A has a government franchise to produce good X, then the market for good X may not be contestable, despite being the sole producer in the U.S. market. Options A, B, and C suggest the presence of potential substitutes and competition, which make the market more contestable.

If a Company Is the Sole U