Limit Pricing in a Contestable Market Sets the Price at the Highest

question 75

Multiple Choice

Limit pricing in a contestable market sets the price at the highest level that .

• A) maximises the profit of the existing firm
• B) inflicts a loss on an entrant
• C) maximises the profit of an entrant
• D) maximises the profit of both the existing firm and the entering firm

---

Definitions:

Obligated

Required by a legal or moral duty to do something or responsible for an action.

Overdue

Overdue signifies being past the time or date by which a task, obligation, or payment was due to be completed or made.

Principal

In finance, the original sum of money borrowed or invested, excluding any interest or dividends. In law, the primary party who authorizes another (the agent) to act on their behalf.

Installments

Payments divided over a period of time for a debt or purchase, rather than paying the total amount upfront.