In each of the following possible circumstances, decide whether the effect will be to:
-The market is contestable. _

Question

Quizplus · Accepted Answer

In a contestable market, the threat of potential entry by new competitors puts pressure on existing firms to behave competitively, which tends to reduce monopoly profits and prevent prices from being considerably above the competitive level. This is because the fear of new entrants taking away market share encourages existing firms to keep prices low and efficiency high to deter entry.

In Each of the Following Possible Circumstances, Decide Whether the Effect