To Deter a Potential Entrant, an Existing Firm in a Market

question 143

Multiple Choice

To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market. The firm can make this threat credible by limiting its own options, and possible actions of this type include:

• A) signing long-term sales contracts that commit the firm to high levels of output.
• B) building a very large factory that could potentially produce enough output to meet most of the market demand.
• C) signing long-term purchase contracts for large amounts of production inputs.
• D) all of the above

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Definitions:

Buffy Coat

The fraction of an anticoagulated blood sample that contains most of the white blood cells and platelets following density gradient centrifugation.

Centrifuged

The process of subjecting various materials or solutions to the force of a centrifuge to separate components based on density.

Reference Laboratory

A laboratory owned and operated by an organization outside the physician’s practice.

Morphology

The examination of the shape and configuration of living creatures and their unique structural characteristics.