A market is defined as perfectly contestable if ?
Correct answer: B. entry to it and exit from it are both costless
- A. entry to it is costly but exit from it is costless
- B. entry to it and exit from it are both costless
- C. entry to it and exit from it are both costly
- D. entry to ti costless but exist from it is costly
Explanation
A perfectly contestable market has no significant barriers to entry or exit, so firms can enter when profits appear and leave without losing sunk costs. This makes both entry and exit costless in the standard definition.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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