The more a firm invests in a new production technology, the lower its marginal costs. Which of the following scenarios involving this incumbent firm and a potential entrant makes the least economic sense?
a. The incumbent overinvests to deter entry when this investment is observable to the entrant.
b. The incumbent overinvests to deter entry when this investment is unobservable to the entrant.
c. The incumbent underinvests to accommodate entry when this investment is observable and they compete in prices.
d. The incumbent overinvests to accommodate entry when this investment is observable and they compete in quantities.
b
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Suppose the economy is in a long-run equilibrium when a positive demand shock occurs. On the graphs above, show what happens to bring the economy back to long-run equilibrium, assuming that there is no policy response
In words, describe how the graph would be different, if policy makers did intervene.
Refer to Scenario 3.1. What is the total utility that Andy will receive if he consumes 5 units of potato chips (Qp) and no Cola drink (Qc)?
A) 4 utils B) 10 utils C) 30 utils D) 40 utils E) none of the above
Entrepreneurs are more likely to develop among minority groups that have been blocked from traditional high-paying jobs
a. True b. False Indicate whether the statement is true or false
Refer to the accompanying figure. The absolute value of the slope of the demand curve D1 is ________, and the absolute value of the slope of demand curve D2 is ________.
A. 5/4; 4/5 B. 4/5; 5/4 C. 1/2; 2 D. 2; 1/2