Answer:
The correct answer is inertia.
Explanation:
Inertia is called in physics the resistance that bodies oppose to modify their state of motion or stillness, either to alter their speed, their course or to stop; although the term also applies to the modifications of your physical state.
A body, thus, requires a force that overcomes inertia to alter its trajectory, which would otherwise adhere to the laws of uniform rectilinear motion, or to initiate a movement, otherwise it would remain at rest. This, of course, considering that there is no rest or rectilinear and uniform movement in the universe, except based on a reference (observation) system. That is why it is preferred to speak of "relative rest."
Answer: threat of new entrants will prevent the prices from rising above the competitive level.
Explanation:
A contestable market has competition such that sellers cannot unilaterally decide to sell at a certain price. They have to sell at a competitive price that is set by the market to ensure that goods are allocated efficiently.
If the prices attempt to rise above this competitive level, new sellers will enter the market so as to make a profit which would have the effect of driving the price back down to where it was and even lower if even more sellers come in. The price is therefore maintained to ensure that this does not happen.
Assume that skilled labor costs twice as much as unskilled labor, a profit maximizing firm will hire until the marginal product of unskilled labor is half that of skilled labor.
A profit maximizing firm is a firm that tries to create products that are of good quality at the barest or smallest cost.
The marginal product falls after an additional amount of the resource has been added. It is the extra amount that is gained due to the addition of an extra unit.
Due to the fact that both the skilled and unskilled would decrease eventually, the company would have to hire both at equal marginal products.
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