According to the contestable markets theory,
A)even if an industry is comprised of a small number of firms, this is not sufficient evidence that the firms perform in a noncompetitive way.
B)profits cannot be zero in an industry if the number of sellers in the industry is small.
C)if a market is contestable, inefficient producers are more likely to survive than if the market is not contestable.
D)b and c
E)a, b, and c

Question

Quizplus · Accepted Answer

The contestable markets theory suggests that the number of firms in a market is not the sole determinant of competitiveness. It emphasizes the importance of barriers to entry and exit, suggesting that even markets with a few firms can be highly competitive if there are no significant barriers to entry. This theory argues that the threat of potential competition can discipline existing firms to behave competitively, focusing on efficiency and price competitiveness.

According to the Contestable Markets Theory