Which of the following is a method a monopolist firm might use to prevent entry into a market?
A)Limit pricing
B)Predatory pricing
C)Capacity expansion
D)All of the above
E)None of the above

Question

Quizplus · Accepted Answer

A monopolist firm may use all three methods to prevent entry into a market. 
Limit pricing involves setting a low price to deter new firms from entering the market as they will not be able to cover their costs. 
Predatory pricing involves setting prices below the cost to drive competitors out of business. 
Capacity expansion involves increasing production capacity to lower costs and make it difficult for new firms to compete.

Which of the Following Is a Method a Monopolist Firm