The price in a contestable market is similar to that in a perfectly competitive market because
A) there are barriers to entry.
B) there are no barriers to entry.
C) there are many firms in the market.
D) the firm can earn an economic profit in the long run.

Question

Quizplus · Accepted Answer

In a contestable market, the absence of barriers to entry allows potential competitors to enter the market easily, leading to prices similar to those in a perfectly competitive market where firms are price takers.

The Price in a Contestable Market Is Similar to That