In the Dominant Firm Model as Evidenced by the Production

question 13

Multiple Choice

In the dominant firm model as evidenced by the production of iPods by Apple,the entrance of the competitive fringe firms has what effect on the dominant firm?

• A) Its price is lower, but it produces more output.
• B) Its price is lower, and it produces less output.
• C) Its price is the same, but it produces less output.
• D) Its price is higher, but it produces more output.

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Definitions:

Pareto Efficient

A Pareto efficient outcome is one in which it is impossible to make any one individual better off without making at least one individual worse off, indicating an optimal allocation of resources.

Utility Function

A mathematical representation of how a consumer's preferences between different goods or services translate into levels of satisfaction or utility.

Initial Endowment

Refers to the initial allocation of goods, resources, or wealth that an individual or entity possesses before any transactions.

Pareto Efficient

A situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off.