If a Company That Is Threatened with Price Controls Diversifies

question 92

Multiple Choice

If a company that is threatened with price controls diversifies into product lines that are relatively free of price controls, the firm would be following which of the
Following strategies?

• A) adapt the product line.
• B) shift target segments or market.
• C) negotiate with the government.
• D) launch a variant of an existing product.
• E) predict the incidence of price controls.

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Definitions:

Fixed Cost

Costs that do not change with the level of output, such as rent or salaries.

Cartel

A formal agreement among competing firms to control prices or exclude entry of a new competitor in the market, often resulting in higher prices.

Marginal Cost

Marginal Cost is the cost of producing one more unit of a good or service, a crucial concept in economics for decision-making and pricing strategies.

Cartel

A formal agreement among competing firms in an industry to control prices, limit output, or divide markets.