In order for "limit pricing" to be effective, the firm practicing such a strategy must be able to charge a price that is:
A) lower than the potential entrant's ATC but greater than the firm's own ATC.
B) greater than the potential entrant's ATC but lower than the firm's own ATC.
C) lower than the potential entrant's ATC but greater than the firm's own AVC.
D) greater than the potential entrant's ATC but lower than the firm's own AVC.
A
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The marginal resource cost of a resource is the additional cost of employing one additional unit of the resource
a. True b. False
A profit maximizing monopolist sets price and output so that it always operates on the elastic portion of its straight-line demand curve when in equilibrium
a. True b. False Indicate whether the statement is true or false
A best response function:
A. is also known as a strategic demand function. B. is upward-sloping if free riding occurs. C. shows the relationship between a player's choice and another player's best response. D. plots all of the Nash equilibriums in a game.
A delivery company lowers its automobile insurance costs as it increases in size because as the size of the fleet of delivery trucks increases, the premium per driver decreases substantially. This is an example of
A. constant returns to scale. B. diseconomies of scale. C. diminishing marginal returns. D. economies of scale.