A contestable market is one in which there are
A) one or a few firms and entry into the market is not costly.
B) many firms and entry into the market is not costly.
C) one or a few firms and entry into the market is costly.
D) many firms and entry into the market is costly.

Question

Quizplus · Accepted Answer

A contestable market is characterized by the ease with which potential competitors can enter and exit the market, not by the number of existing firms. Therefore, the key feature of a contestable market is the absence of significant barriers to entry, making it possible for one or a few firms to operate in a market where entry and exit are not costly.

A Contestable Market Is One in Which There Are