The theory of contestable markets concludes that
A)a small number of firms in an industry is strong evidence that they will perform in a noncompetitive way.
B)even if the number of sellers in an industry is small, profits can be zero in the industry.
C)inefficient producers can survive in a contestable market.
D)a firm in a contestable market will sell at a price above marginal cost.
E)all of the above

Question

Quizplus · Accepted Answer

The theory of contestable markets suggests that even with a small number of firms, an industry can have competitive outcomes like zero economic profits if there are no barriers to entry and exit, making the market contestable.

The Theory of Contestable Markets Concludes That