Incumbents Are Unaffected by Fixed Costs of Entry While Potential

question 64

Multiple Choice

Incumbents are unaffected by fixed costs of entry while potential entrants are affected by them because

• A) for potential entrants the cost is avoidable, while for the incumbent, it is not.
• B) fixed costs will be greater for the potential entrant than for the incumbent.
• C) fixed costs are zero for the incumbent.
• D) incumbents will act to prevent entry at all costs.

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Definitions:

Serial Bonds

Serial bonds refer to a type of bond issue that is divided into several parts, each maturing at different intervals over a period of time, allowing the issuer to phase out the repayment over several years.