Sky-High Skywriters charges competitive prices for its skywriting services even though it has no competition.This is most likely because
A)There are no economies of scale in this industry.
B)It operates in a contestable market.
C)It is a natural monopoly.
D)It cares more about customers' well-being than its own well-being.

Question

Quizplus · Accepted Answer

Since there is no competition, it may seem like Sky-High Skywriters would have the ability to set higher prices. However, the fact that it charges competitive prices suggests that there is the potential for new firms to enter the market and offer similar services at lower prices. This indicates that the market is contestable, meaning that potential competitors stay away only when a profitable opportunity is not present.

Sky-High Skywriters Charges Competitive Prices for Its Skywriting Services Even