In the Dixit-Spence Model, the Limit Quantity Is an Output

question 1

Multiple Choice

In the Dixit-Spence model, the limit quantity is an output level for the incumbent that will drive the price down sufficiently to force the entrant

• A) into the market
• B) to earn extra-normal profits
• C) out of the market

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Definitions:

Automobile Workers

Individuals employed in the automotive industry, involved in the design, production, or assembly of automobiles.

Price

The economic worth conjectured, obligatory, or handed over as a consideration for something.

Resource Market

A marketplace where resources (such as labor, capital, and natural resources) are bought and sold, facilitating economic production.

Factors of Production

Resources used in the creation of goods and services, including land, labor, capital, and entrepreneurship.