Contestable markets
A) exist where monopolies charge high prices.
B) exist where the threat of easy entry prevents a dominant company from charging excessive prices.
C) are markets that have protection from barriers to entry.
D) make it more challenging for firms to merge.

Question

Quizplus · Accepted Answer

Contestable markets are characterized by the ease with which potential competitors can enter and exit the market. This threat of potential competition prevents a dominant company from charging excessively high prices, as doing so would attract new entrants to the market, increasing competition.

Contestable Markets