Which of the following is not correct about contestable markets?
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)Firms already in the market have technological advantages.

Question

Quizplus · Accepted Answer

The statement "Firms already in the market have technological advantages" is not correct about contestable markets. In a contestable market, new firms entering the market can produce the product at the same cost as current firms. This eliminates any technological advantage that existing firms might have had.

Which of the Following Is Not Correct About Contestable Markets