The Strategy of Establishing a Price That Prevents the Entry

question 174

Multiple Choice

The strategy of establishing a price that prevents the entry of new firms is called:

• A) a price war.
• B) limit pricing.
• C) price leadership.
• D) setting a profit-maximizing price.

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Definitions:

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, at which point a business neither makes a profit nor incurs a loss.

Sales Units

The quantity of product sold, often used as a measure in assessing sales performance and operational efficiency.

Fixed Expenses

Costs that do not change with the level of production or sales over the short term, such as rent, salaries, and insurance.

Break-even Point

The break-even point is the sales level at which total revenues equal total costs, resulting in neither profit nor loss.