A market is not contestable if:
A)all producers have access to the same technology.
B)consumers respond quickly to a price change.
C)existing firms cannot respond quickly to entry by lowering their price.
D)there are sunk costs.

Question

Quizplus · Accepted Answer

Sunk costs are costs that cannot be recovered if a firm decides to exit the market. This creates a barrier for new firms to enter the market, which reduces contestability. The other options do not necessarily affect contestability.

A Market Is Not Contestable If