Over the long run, why do low-cost providers generally prevail?
What will be an ideal response?
As competition increases, lower-cost providers can still be profitable while higher-cost providers have to match market price, which may be less than their respective marginal cost. An example of this is the growth of Walmart. Because of its distribution system and large size, Walmart is a low-cost provider and can generally withstand pricing competition from competitors because it can charge a lower price and still make a profit.
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Explain why selling output at a price below that at which marginal revenue equals marginal cost (MR = MC) might serve to deter entry of a potential competitor
What will be an ideal response?
Who provides the primary source of funding for a program promoting forward and backward linkages in an LDC?
a. government b. entrepreneurs c. consumers d. workers e. taxpayers
Brand loyalty can be enhanced through:
A. a price war. B. an advertising campaign and a price war. C. neither an advertising campaign nor a price war. D. an advertising campaign.
If the payment to an input is pure economic rent, then reducing that payment will:
A. Not influence the availability of the input B. Increase the quantity supplied of the input C. Decrease the quantity supplied of the input D. Decrease the demand for the input