An incumbent usually charges a higher price than a new entrant does. Which of the following is a plausible reason for this observation?
A. An incumbent usually has a bigger bureaucratic body than a new entrant does and hence has a higher marginal cost.
B. The incumbent is ignorant of the new entrant, hence it is still charging the old high price.
C. Consumers are risk averse, hence new firms charge lower prices to attract customers.
D. All of the statements associated with this question are correct.
Answer: C
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Use the following table to answer the question below.Jake's Production Possibilities ScheduleJane's Production Possibilities SchedulePounds of Green BeansPounds of CornPounds of Green BeansPounds of Corn01600801012020602080404030406020400800Jake should specialize in the production of which good?
A. corn B. green beans C. both D. neither
The prisoners' dilemma is
A) an example of a duopoly game. B) a theory about why firms break the law. C) competition that can occur among firms in monopolistic competition. D) an example of the monopolist charging high prices. E) an example of a game that does not have a Nash equilibrium.
People are forced to economize because of
A. competition. B. pressure to conform. C. scarcity. D. the absence of money.
Refer to Scenario 12.1. What is the profit maximizing price of a monopolist?
A) $400 B) $600 C) $800 D) $900 E) none of the above