Which of the following is not a condition of a contestable market?
A)There is easy entry into and costless exit from the market.
B)New firms entering the market can produce the product at the same cost as current firms.
C)Firms exiting the market can easily dispose of their fixed assets by selling them elsewhere.
D)New firms entering the market produce a higher-quality product than existing firms.

Question

Quizplus · Accepted Answer

A contestable market is characterized by the ease of entry and exit, the ability of new firms to compete at the same cost as existing firms, and the ease of disposing of assets. The production of a higher-quality product by new firms is not a condition for market contestability; rather, it focuses on the structural conditions that allow for potential competition.

Which of the Following Is Not a Condition of a Contestable