____ yields the same results as the theory of perfect competition,but requires substantially fewer assumptions than the perfectly competitive model.

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Quizplus · Accepted Answer

The theory of contestable markets yields the same results as the theory of perfect competition, but it requires fewer assumptions. This theory argues that a market can be competitive as long as there are low barriers to entry and exit, which keeps firms behaving as if they are under constant threat from potential competitors. This idea challenges the assumptions made in perfect competition, such as the need for many buyers and sellers, perfect information, and no barriers to entry. Baumol's sales maximization hypothesis is a theory about firms' behavior, not market structure. The Pareto optimality condition is a concept from welfare economics, not a model of market structure. The Cournot model is a duopoly model that assumes firms behave strategically, not a model that assumes free entry and exit.

____ Yields the Same Results as the Theory of Perfect