A Profit-Maximizing Oligopolist Should Set a Price by Using

question 86

Multiple Choice

A profit-maximizing oligopolist should set a price by using:

• A) target return pricing.
• B) average-cost pricing.
• C) leader pricing.
• D) marginal analysis.
• E) cost-oriented pricing.

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Definitions:

Marginal Revenue

The extra revenue earned from the sale of an additional unit of a product or service.

Maximize Profits

The process by which a firm adjusts its production and pricing strategies to earn the highest possible profit.

Economic Profits

Profits calculated by subtracting both the explicit and implicit costs of production from total revenues.

Monopolistically Competitive

Describes a market type where numerous sellers offer differentiated products, leading to competitive yet non-homogeneous markets.