The limit price may be defined as:
A)the price that consumers are willing to pay for the monopolist's profit- maximizing output.
B)the price at the tangency between a potential entrant's LAC curve and the market demand curve.
C)the maximum price permitted by law.
D)the highest price existing firms can charge to deter entry.

Question

Quizplus · Accepted Answer

The limit price is the highest price that existing firms can charge to deter new entrants from entering the market, ensuring that potential competitors cannot profitably enter the market.

The Limit Price May Be Defined As