Which of the following does not represent a strategic behaviour?
A)Build a factory with higher than needed capacity to deter possible entrants.
B)Spend heavily on advertising to signal a quality product.
C)Price below marginal cost to drive competitors out of business.
D)Choose output so that marginal revenue equal marginal cost.

Question

Quizplus · Accepted Answer

Choosing output so that marginal revenue equals marginal cost is a pricing decision that maximizes profit, but it is not a strategic behaviour. A strategic behaviour is one that aims to gain a competitive advantage, deter new entrants, or drive competitors out of business. Options A, B, and C are all examples of strategic behaviours.

Which of the Following Does Not Represent a Strategic Behaviour