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Author Question: How do you think the theory of contestable markets has been used as a means of arguing for weaker ... (Read 41 times)

D2AR0N

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on: Jun 29, 2018
How do you think the theory of contestable markets has been used as a means of arguing for weaker enforcement of antitrust laws? Explain.
 
  What will be an ideal response?

Question 2

Refer to Table 1-4. Using marginal analysis, how many hours should Eva extend her bakery's hours of operations?
 
  A) 2 hours B) 3 hours C) 4 hours D) 5 hours E) 6 hours


frejo

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The theory of contestable markets can be used to argue for weaker enforcement of antitrust laws by observing that a monopoly market may not prove that a firm is exploiting its market power to control the price level since excess profits will quickly lead to entry by new firms.

Answer to Question 2

C


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