Evidence of the Intent to ________ Is Necessary to Prove

question 118

Multiple Choice

Evidence of the intent to ________ is necessary to prove that a firm is engaged in predatory pricing.

• A) lower prices after others are driven out of business
• B) raise prices after others are driven out of business
• C) increase quantity after others are driven out of business
• D) lower average fixed costs after others are driven out of business
• E) subsidize competitors so they are not driven out of business

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Definitions:

Oligopoly

A market structure characterized by a small number of firms that dominate the market, leading to limited competition.

Economic Profit

The difference between total revenue and total cost, including both explicit and implicit costs.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a product for which all sellers offer identical products.

Marginal Cost

The cost added by producing one extra item of a product.