A Single Firm That Charges the Monopoly Price in the Market

question 85

Multiple Choice

A single firm that charges the monopoly price in the market earns $600.If another firm successfully enters the market,the incumbent's profits fall to $350 and the entrant earns $275.If the incumbent engages in limit pricing,its profits are $400.For what interest rate,i,is limit pricing a profitable strategy for the incumbent?

• A) i > 4
• B) i < 0.25
• C) 0.75 < i < 4
• D) 0.25 < i < 0.75

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Definitions:

John B. Watson

An American psychologist who is considered one of the founders of behaviorism; he emphasized the importance of observable behaviors over internal processes.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior.

Voluntary Responses

Actions that are performed deliberately and with awareness, typically as a result of conscious decision making.

Psychodynamic Perspective

A view in psychology which emphasizes the role of unconscious processes and past experiences in shaping behaviors and personalities.