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- Subject
- Marketeconomics-mcqs › market
- Published
- 31 May 2019
- Last updated
- 28 May 2026
In a contestable market, how must existing companies act to prevent new competitors from entering?
Multiple choice question for Market. Select an option, then review the explanation below.
Explanation
In contestable markets, incumbent firms need to behave like competitive firms to deter potential entrants. This means they must price and act in ways that make entry unattractive, rather than relying on collusion, product differentiation, or price discrimination.
More Market MCQs
Practice related questions from the same subject.
- 1.Broadcasting firms use satellite TV subscriptions and signal detection tools primarily to combat which issue?
- 2.Which of the following is a classic example of a public good?
- 3.Which of the following factors can lead to market failure?
- 4.When a neighbor burns yard debris and smoke enters your home, what type of externality does this represent?
- 5.Why is a competitive equilibrium considered Pareto efficient?