A Single Firm That Charges the Monopoly Price in the Market

question 57

Multiple Choice

A single firm that charges the monopoly price in the market earns $800.If another firm successfully enters the market,the incumbent's profits fall to $500 and the entrant earns $450.If the incumbent engages in limit pricing,its profits are $600.For what interest rate,i,is limit pricing a profitable strategy for the incumbent?

• A) i < 0.5
• B) 0.5 < i < 1.0
• C) 1.0 < i < 1.5
• D) i > 1.5

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Definitions:

π Network

The conjugated system of pi bonds found in molecules where alternating single and double bonds allow for delocalization of electrons across the structure.

Aromatic Structures

Compounds containing one or more benzene rings, characterized by a stable ring of atoms with delocalized electrons.

NonAromatic

Molecules or compounds that do not contain a ring of continuously overlapping p orbitals, thus lacking the stability associated with aromatic systems.

π Network

An extended system of π bonds in a molecule, which can involve multiple atoms contributing p orbitals for delocalized electron sharing.