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) monopolistic competition market.
B) contestable market.
C) limit- pricing market.
D) cartel.

Question

Quizplus · Accepted Answer

A contestable market is characterized by the ease with which potential firms can enter and exit the market, thus facing competition not only from existing firms but also from potential entrants. This concept emphasizes the importance of the threat of entry in keeping prices competitive, even if the market has few actual competitors.

A Market in Which Firms Can Enter and Leave So