Deterring Entry Might Require a Firm to

question 89

Multiple Choice

Deterring entry might require a firm to

• A) price their product closer to the competitive price than to the monopoly price.
• B) price their product closer to the monopoly price than to the competitive price.
• C) drop output almost to zero to show the consumers "who's boss."
• D) drop price almost to zero to get price below marginal cost.

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Definitions:

Independent Variable

The variable causing a change in some other (dependent) variable.

Dependent Variable

A variable that changes as a consequence of a change in some other (independent) variable; the “effect” or outcome.

Interest Rate

The interest rate is the percentage charged on the total amount borrowed or earned, representing the cost of borrowing money or the reward for saving.

Investment

The act of allocating resources, usually financial, into something with the expectation of generating income or profit.