If a Dominant Firm Follows a Strategy of Limit Pricing

question 60

Multiple Choice

If a dominant firm follows a strategy of limit pricing, this firm charges a price _________ the current profit-maximizing level in order to _____________.

• A)equal to; maximize profits.
• B)below; reduce the rate of expansion by the fringe.
• C)above; drive out the fringe.
• D)below; limit dominant firm's marginal cost.

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Definitions:

Factory

A building or complex where goods are manufactured or assembled primarily by machine.

Finished Goods

Items that have finished being made but haven't been purchased by buyers yet.

Production Jobs

Tasks or operations related to the manufacturing or production process within an organization, often categorized by specific roles or assignments.

Profit

The financial gain realized when the amount of revenue gained exceeds the expenses, costs, and taxes needed to sustain the operation.