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In a Contestable Market with One Firm in the Market

Question 81

Multiple Choice

In a contestable market with one firm in the market, the existing firm will


A) set its price equal to the monopoly price.
B) set its price lower than the monopoly price.
C) have a demand curve that is horizontal at the price that will attract new firms to enter the market.
D) set its price higher than the monopoly price.

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