An Incumbent Usually Charges a Higher Price Than a New

question 120

Multiple Choice

An incumbent usually charges a higher price than a new entrant does.Which of the following is a plausible reason for this observation?

• A) An incumbent usually has a bigger bureaucratic body than a new entrant does and hence has a higher marginal cost.
• B) Consumers are risk averse, hence new firms charge lower prices to attract customers.
• C) The incumbent is ignorant of the new entrant, hence it is still charging the old high price.
• D) All of the statements associated with this question are correct.

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Definitions:

Action Orientations

An individual's or organization's propensity to take initiative, make decisions, and execute plans effectively and efficiently.

Results Oriented

An approach or mindset that focuses on achieving specific outcomes or goals, often emphasizing the end result over the process used to achieve it.

Time Management

The process of organizing and planning how to divide your time between specific activities to increase effectiveness, efficiency, and productivity.

Prioritizing

The process of determining the most important tasks or goals and allocating time and resources accordingly.