A New Firm Enters a Market Which Is Initially Serviced

question 98

Multiple Choice

A new firm enters a market which is initially serviced by a Cournot duopoly charging a price of $20.What will the new market price be should the three firms co-exist after the entry?

• A)$20.
• B)below $20.
• C)above $20.
• D)none of the statements associated with this question are correct.

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Definitions:

Excess Cash

Funds that exceed the normal operational needs of a business, which may be invested or used for additional expenditures.

One-Time Payment

A payment that is made in a single installment rather than divided into multiple payments.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health.

Cash Dividend

A payment made by a company out of its profits to its shareholders in the form of cash.