Which of the Following Is Not a Condition Under Which

question 2

Multiple Choice

Which of the following is not a condition under which an incumbent firm can successfully deter entry by holding excess capacity?

• A)The investment in excess capacity must be sunk prior to entry
• B)The incumbent should have a sustainable cost advantage
• C)Market demand growth should be slow
• D)The potential entrant should not itself be attempting to establish a reputation for toughness
• E)The excess capacity investment must be recoverable prior to entry

---

Definitions:

Ultimatum Game

A game in experimental economics in which two players decide how to divide a sum of money; the first player proposes a division, and the second player can accept or reject it, where rejection means neither player receives anything.

Neoclassical Economics

A framework in economics focusing on the determination of goods, outputs, and income distributions in markets through supply and demand, emphasizing rationality and marginal utility.

Sense of Fairness

An individual's perception of the balance and justice in social interactions and distribution of resources.

Dictator Game

A behavioral experiment that tests how fairly individuals act towards others when given the unilateral power to determine the distribution of a resource.