When a high fixed cost of production exists, markets are:
A) easily contested.
B) difficult to contest.
C) moderately difficult to contest.
D) uncontestable.

Question

Quizplus · Accepted Answer

When there is a high fixed cost of production, it becomes difficult to contest the market as new entrants would have to incur the same fixed costs. This results in a barrier to entry for potential competitors, making the market difficult to contest.

When a High Fixed Cost of Production Exists, Markets Are