A Single Firm That Charges the Monopoly Price in the Market

question 85

Multiple Choice

A single firm that charges the monopoly price in the market earns $600.If another firm successfully enters the market,the incumbent's profits fall to $350 and the entrant earns $275.If the incumbent engages in limit pricing,its profits are $400.For what interest rate,i,is limit pricing a profitable strategy for the incumbent?

• A) i > 4
• B) i < 0.25
• C) 0.75 < i < 4
• D) 0.25 < i < 0.75

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Definitions:

International Debts

Financial obligations owed by one country to foreign lenders, which can include governments, corporations, or international financial institutions.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, often measured as the percentage increase in real gross domestic product (GDP).

Trade Barriers

Measures implemented by governments to regulate international trade, such as tariffs, quotas, and import bans, which can protect domestic industries.

Population Growth

The increase in the number of individuals in a population, usually measured as the percentage change at a specific time.