What Situation Occurs If an Incumbent Firm with Increasing Marginal

question 14

Multiple Choice

What situation occurs if an incumbent firm with increasing marginal costs or limited capacity sets a price just below the entrants' marginal costs even though the incumbent may be unable to meet all market demand (or possibly may have to sacrifice its profits to do so) ?

• A)Contestable limit pricing
• B)Strategic limit pricing
• C)Predatory pricing
• D)Quality pricing
• E)Capacity expansion

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