Firm a and Firm B Are the Only Two Companies

question 160

Multiple Choice

Firm A and Firm B are the only two companies that sell mail-order DVD rental subscriptions.For several years,Firm A priced its subscriptions below average variable cost.Firm B tried to compete by also selling subscriptions below average variable cost,but went bankrupt and exited the market.Several months after Firm B exited the market,Firm A raised prices by 40 percent and is currently earning large,positive economic profits.Based only on this information,an argument can be made that

• A) Firm B must have made bad business decisions because it went bankrupt.
• B) Firm A and Firm B must have had a collusive agreement.
• C) the mail-order DVD rental subscription market is a monopolistically competitive market.
• D) Firm B engaged in predatory pricing.
• E) Firm A engaged in predatory pricing.

Recognize the importance of sensory marketing and which sense is targeted by different marketing strategies.

Comprehend the concept of learning in consumer behavior and how it affects decision-making processes.

Identify the role of reference groups, culture, and lifestyle in consumer preferences and decisions.

Understand the principles of Maslow's hierarchy of needs and how they relate to consumer priorities and marketing strategies.

---

Definitions:

Profit-Maximizing

The process or strategy of adjusting production and sales to achieve the highest possible profit under given conditions.

Personalized Sweaters

Custom-made sweaters tailored to individual preferences regarding design, color, and often with personal messages or images.

Fixed Cost

Expenses that do not change in the short term, regardless of the level of output or sales, such as rent, salaries, and loan payments.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power and price-setting ability.