If a Dominant Firm Follows a Strategy of Limit Pricing

question 60

Multiple Choice

If a dominant firm follows a strategy of limit pricing, this firm charges a price _________ the current profit-maximizing level in order to _____________.

• A)equal to; maximize profits.
• B)below; reduce the rate of expansion by the fringe.
• C)above; drive out the fringe.
• D)below; limit dominant firm's marginal cost.

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