Which of the following statements about contestable markets is incorrect?

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In a contestable market, firms constantly face actual or potential competition due to low entry barriers.Sustained economic profits are not possible in the long term within a contestable market.Competitive pressures in a contestable market ensure firms operate efficiently or exit the market.A market can only be considered contestable if the product is manufactured using labor-intensive methods.

Explanation

Contestable markets are characterized by easy entry and exit, which subjects firms to ongoing competition or the threat thereof, preventing long-term economic profits and encouraging efficiency. However, the nature of the production technology, such as being labor-intensive, is not a requirement for a market to be contestable.