Which of the Following Is a Correct Statement

question 69

Multiple Choice

Which of the following is a correct statement?

• A) Predatory pricing is easy to prove in a court of law.
• B) An incumbent firm may experience a learning curve that allows it to produce at a lower cost than a potential entrant.
• C) A firm receives no individual benefit from strategies that raise the marginal costs of its rivals.
• D) No individual firm can benefit from strategies that raise the fixed costs of all the firms in the industry.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the activity of a business, such as sales volume or production levels.

Fixed Expenses

Costs that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance premiums.

Target Profit

The amount of net income a business aims to achieve within a specific period.