If an Oligopolist Reduces the Price of Its Product Relative

question 15

Multiple Choice

If an oligopolist reduces the price of its product relative to its competitors:

• A) some customers will switch to rival firms.
• B) the number of customers it has will likely remain unchanged.
• C) some customers will switch from rival firms to buy from him.
• D) rival firms are unlikely to react.

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Definitions:

Predistribution Plan

A strategy aimed at addressing income inequality through policy measures affecting the market distribution of income before taxes and transfers, rather than by adjusting after-tax incomes.

Financial Report

A formal record of the financial activities and position of a business, individual, or other entity over a period.

Liquidation

The process of closing a business and distributing its assets to claimants, typically after a company is unable to meet its financial obligations.

Profit and Loss Ratio

Measures the efficiency of a company in generating profits from its operations, calculated by dividing net profit by net sales.