-The Above Figure Shows the Payoff Matrix Facing an Incumbent

question 19

Multiple Choice

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.If the fixed cost of entry were to increase,which of the following would occur?

• A) The incumbent chooses the Cournot level of output.
• B) The incumbent shuts down.
• C) The entry-deterring level of output rises.
• D) The entry-deterring level of output falls.

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Definitions:

Term Deposit

A banking term for a fixed-term investment where money is deposited at an agreed interest rate and cannot be withdrawn until the term has expired without incurring a penalty.

Maturity Value

The total amount that will be paid to an investor at the end of a bond's term or upon maturity of an investment.

Interest Components

The different parts that make up the total interest calculation, including the principal amount, interest rate, and time period.

Principal

The original sum of money borrowed in a loan or the initial amount of investment, not including interest or profits.