A market in which firms can enter and leave so easily that firms in the market face competition from potential entrants is called a
A)contestable market.
B)cartel.
C)limit pricing market.
D)monopolistic competition market.
E)natural oligopoly.

Question

Quizplus · Accepted Answer

A contestable market is one in which barriers to entry are low and firms can enter and exit the market easily. This creates a situation where incumbents in the market face competition not only from other existing firms but also from potential entrants. In a contestable market, there is little to no market power as the threat of entry keeps firms behaving competitively.

A Market in Which Firms Can Enter and Leave So