In a Duopoly, If One Firm Increases Its Price, Then

question 154

Multiple Choice

In a duopoly, if one firm increases its price, then the other firm can

• A) keep its price constant and thus increase its market share.
• B) keep its price constant and thus decrease its market share.
• C) increase its price and thus increase its market share.
• D) decrease its price and thus decrease its market share.

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Definitions:

Controllable Variance

Controllable variance is a measure used in managerial accounting to assess the differences between actual and budgeted amounts that management can influence or control.

Variable Overhead Costs

Variable overhead costs fluctuate with changes in production volume, including costs like utilities and raw materials not directly tied to a product.

Fixed Overhead Costs

Expenses that remain constant irrespective of the volume of production or sales, including rent, salaries, and insurance.

Production Volume

The total quantity of goods or services produced by a company during a specific period.