A Potential Entrant Knows That It Faces a (Inverse)residual Demand

question 60

Multiple Choice

A potential entrant knows that it faces a (inverse) residual demand curve given by P = 90 − 3Q.While the entrant does not know the inverse market demand,it does know that the incumbent committed to producing 10 units.Using this information,which of the following equations best summarizes the inverse market demand curve?

• A) P = 60 − 3Q
• B) P = 80 − 3Q
• C) P = 50 − 3Q
• D) None of the preceding statements is correct.

---

Definitions:

Response

An answer or reply given in reaction to a question or situation.

Blank

An empty space or a place on a document where information is to be filled in, or referring to something without marks or decorations.

Red Herring Fallacy

A logical fallacy where irrelevant information is presented to distract from the actual issue.

False Dichotomy

A logical fallacy that presents two opposing options as the only possibilities, when in fact more options may exist.