Early Entrants to a Market That Are Able to Create

question 61

Multiple Choice

Early entrants to a market that are able to create switching costs that tie the customer to the product are capitalizing on:

• A) first-mover advantages.
• B) pioneering costs.
• C) economies of scale.
• D) late-mover advantages.

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Definitions:

Payoff Matrix

A payoff matrix is a table that shows the potential outcomes of different strategies in a game theory scenario, where the payoffs for each participant are listed.

Equilibrium Outcome

The state in which market supply and demand balance each other, and, as a result, prices become stable.

Collusive Agreements

Arrangements between firms or countries to limit competition, set prices, or regulate market entry, often considered illegal or anti-competitive in many jurisdictions.

Prisoner's Dilemma

A situation in game theory where two individuals acting in their own self-interest do not produce the optimal outcome for either party.