How are the contestable market model and the cartel model of oligopoly related? a) Firms act as perfect competitors in both models

An oligopoly and a contestable market are similar because they both react to other firms when setting their prices. In a contestable market, a company sets their prices based off of the threat of competition. Their prices will adjust because there are no barriers to entry that can harm their competitors ability to decrease their market share. In an oligopoly, firms set their prices based off of the other firms in the market to maximize profits by collusion. Oligopolies profit maximize and contestable market firms revenue maximize based off of the rest of the industry. This means the answer is D.