-The Above Figure Shows the Payoff Matrix Facing an Incumbent

question 105

Multiple Choice

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.Assuming a fixed cost of entry,the incumbent will deter entry because

• A) it is more profitable than accommodating entry.
• B) it increases consumer surplus.
• C) the potential entrant winds up with zero profit.
• D) the incumbent would earn zero profit if it accommodated entry.

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