If the Demand Function for the DoorKnobs Operating System Is

question 7

Multiple Choice

If the demand function for the DoorKnobs operating system is related to perceived market share s and actual market share x by the equation p = 512s(1 - x) , then in the long run, the highest price at which DoorKnobs could sustain a market share of 4/5 is

• A)$96.
• B)$256.
• C)$113.78.
• D)$128.
• E)$81.92.

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Definitions:

Long-Run Industry

A period in which all factors of production and costs can be variable, allowing for adjustment to changes in market conditions.

Zero-Profit Equilibrium

A situation where a firm's total revenues exactly equal its total costs, resulting in no economic profit.

Entry

The act of entering or moving into a market or area of business to start operations or activities.

Constant-Cost Industry

An industry where the input costs remain constant irrespective of changes in the overall output level.