A New Firm Enters a Market Which Is Initially Serviced

question 68

Multiple Choice

A new firm enters a market which is initially serviced by a Bertrand duopoly charging a price of $30.Assuming that the new firm is equally as efficient as the incumbent firms,what will the new price be should the three firms coexist after the entry?

• A) Above $30
• B) Below $30
• C) Equal to $30
• D) Unable to tell given the information provided.

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Definitions:

Consumer Development Stage

A phase in the consumer lifecycle where individuals or groups evolve in their purchasing patterns and preferences.

Evaluation Stage

The phase in decision-making where alternatives are assessed against a set of criteria to select the best option.

Percentage of Sales Budgeting

A method of budgeting where advertising and promotional expenses are based on a fixed percentage of the past or projected sales.

Competitive Parity

A marketing strategy where companies set their levels of spending to match competitors, aiming to prevent market share loss.