Question

True or False: A market with several firms in operation can be a competitive, contestable market. True False The contestable market model has important policy implications. If there is concern that a market is not sufficiently competitive, what can policymakers do to increase competition in a given industry? Check all that apply. Decrease entry barriers Increase entry barriers Decrease the amount of regulation

Answer 1

Answer:

1. True

2. Decrease entry barriers

Decrease the amount of regulation

Explanation:

A market with several firms in operation can be a competitive market as the firms involved will compete against each other for the economic profits in the industry. The market has to have low barriers to entry for it to be contestable.

To make the industry more competitive, barriers to entry should be reduced and regulation relaxed. This will bring in more firms into this market and make it more competitive.