Which of the following is not a necessary condition for the contestable market theory?
A)Entry into the market is easy.
B)Exit from an industry is costless.
C)All firms in the industry have different costs of production.
D)A new firm entering the market can produce the product at the same cost that current firms produce it.

Question

Quizplus · Accepted Answer

The contestable market theory does not require all firms in the industry to have different costs of production. It only requires that entry into the market is easy and exit from the industry is costless, and that a new firm entering the market can produce the product at the same cost that current firms produce it.

Which of the Following Is Not a Necessary Condition for the Contestable