Which of the following is not correct about contestable markets?
A)There is easy entry into and costless exit from the market.
B)New firms entering the market can produce the product at the same cost as current firms.
C)Firms exiting the market can easily dispose of their fixed assets by selling them elsewhere.
D)Firms already in the market have technological advantages.
E)b and c

Question

Quizplus · Accepted Answer

In a contestable market, it is assumed that new entrants can compete on an equal footing with existing firms, which means there are no technological advantages for firms already in the market. This ensures that the market remains competitive and accessible.

Which of the Following Is Not Correct About Contestable Markets