An Incumbent Firm Uses Limit Pricing

question 47

Multiple Choice

An incumbent firm uses limit pricing

• A)to set price below a potential rival's marginal cost, thus making entry unprofitable.
• B)to set one price for a quantity of a good below a certain limit, and a second price for purchases above the limit.
• C)when it has no other advantages over a potential rival.
• D)if it is limited in the quantity of inputs it can purchase to produce output.

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Definitions:

Inference Rules

Set guidelines or principles used to deduce new information or conclusions from known facts or premises.

Mental Graph

Mental Graph is a conceptual representation of information in the form of a graph structure in one's mind, used to illustrate relationships between concepts or data.

True Conditions

True conditions refer to circumstances or parameters that are in accordance with fact or reality.

Problem Space

The cognitive framework within which all possible actions, states, and goals are considered by an individual when solving a problem.