Contestable markets true or false: if a firm is operating in a contestable market, it should operate at the efficient production level and earn zero profit. 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

The first statement is false. A firm earning a zero profit is an action called predatory pricing, which there can be a temporary loss because of a super low price and when a new firm enters the market the new firm won’t be able to compete with a very low price forcing the new firm out of the market. This action can be a barrier of entry making the market less contestable. A firm in a contestable market should operate at efficient level of production and earn a minimal profit close to equilibrium.

a

explanation:

okay lol !