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

Question

Quizplus · Accepted Answer

The condition that new firms entering the market can produce the product at lower cost than current firms is not a requirement for a market to be contestable. The other three conditions (easy entry, costless exit, and ability to dispose of fixed assets) are necessary for a market to be contestable.

Which of the Following Is Not a Condition of a Contestable