An Example of Vertical Foreclosure Is When a Firm

question 58

Multiple Choice

An example of vertical foreclosure is when a firm:

• A) temporarily prices below its marginal cost to close competitors out of the market.
• B) merges with a rival firm with the intention of eliminating the rival firm's product from the market.
• C) that controls an essential upstream input refuses to sell to other downstream firms that need the input.
• D) merges with a rival firm with the intention of eliminating the rival firm's product from the market and that controls an essential upstream input refuses to sell to other downstream firms that need the input.

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Definitions:

Real Prices

Prices that have been adjusted for inflation, reflecting the true purchasing power of money over time.

CPI

The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Producer Price Index

An economic indicator that measures the average change over time in the selling prices received by domestic producers for their output.

Wholesale Price Changes

Alterations in the prices at which goods are sold in bulk, typically from manufacturers to retailers before reaching consumers.