Limit Pricing Is the Practice of

question 56

Multiple Choice

Limit pricing is the practice of

• A)limiting the amount that can be purchased to drive up prices.
• B)threatening to go to the limit in a price war if someone enters your market.
• C)charging a monopoly price,but producing a quantity greater than the quantity at which MC = MR.
• D)setting the price at the highest level that inflicts a loss on the entrant.
• E)charging a price higher than the monopoly price,but producing a quantity greater than the quantity at which MC = MR.

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Definitions:

Main Determinant

The primary factor or condition that influences an outcome or result.

Price Elasticity of Supply

The measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price.

Demand-Side

Pertaining to the aspects of the economy influenced by consumer spending and preferences, impacting overall demand for goods and services.

Market Failure

The inability of a market to bring about the allocation of resources that best satisfies the wants of society; in particular, the overallocation or underallocation of resources to the production of a particular good or service because of externalities or asymmetric information, or because markets fail to provide desired public goods.