Monopoly may not be a problem in contestable markets if:
A) The structure of a market is competitive.
B) Firms can exit from the market.
C) Antitrust regulations are enforced.
D) Potential competition exists.

Question

Quizplus · Accepted Answer

Contestable markets are those in which potential competitors can enter quickly and easily if they perceive that the market is producing excess profits. Therefore, the presence of potential competition is a key characteristic of contestable markets, and having a monopoly may not be a problem as long as potential competition can enter the market. The other options may also contribute to a more competitive or fair market, but they are not necessary for a market to be contestable.

Monopoly May Not Be a Problem in Contestable Markets If