La Tortilla is the only producer of tortillas in Santa Teresa. The firm produces 10,000 tortillas each day and has the capacity to increase production to 100,000 tortillas each day
La Tortilla has made a large profit for years, but no other firm has chosen to compete in the Santa Teresa tortilla market. La Tortilla has been able to deter entry because if other firms were to enter the market it would greatly step-up production and reduce price. A) La Tortilla's behavior is inconsistent with economic theory.
B) La Tortilla has been successful because of its credible threat.
C) La Tortilla behaves like a Stackelberg firm.
D) La Tortilla must have other barriers to entry to protect its monopoly power.
B
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Monopolies are inefficient because, at the profit-maximizing output level,
A) MC = MR. B) MC does not equal MR. C) MB = MC. D) MB does not equal MC. E) P = ATC.
Answer the following statements true (T) or false (F)
1) In reality, the expected-profit-maximization rule is an operational guideline. 2) Regression analysis can be used to help managers maximize their expected profit. 3) Managers do not face the risk of their product becoming obsolete as long as they hold their product in inventory. 4) Any action that increases the defendant's expected loss from litigation decreases the maximum amount they are willing to pay to settle. 5) One way to decrease a plaintiff's expected value of litigation is to countersue.
If the public decides to hold smaller cash balances, this will cause a(n)
a. increase in interest rates. b. decrease in average paychecks. c. increase in nominal GDP. d. increase in velocity.
A game in economics is defined as
A) something that is shown on ESPN. B) competition in which strategic decision making is integral. C) competition in general. D) an actual strategy chosen by one or more economic agents.