Limit pricing refers to
A) a situation in which a firm might lower its price to keep potential competitors from entering its market.
B) how the price is determined in a kinked demand curve model of oligopoly.
C) the fact that a monopoly firm always sets the highest price possible.
D) None of the above.

Question

Quizplus · Accepted Answer

Limit pricing is a strategy where a firm sets its price low enough to deter new competitors from entering the market. This is done by making the market less attractive to potential entrants because they would have to accept a lower profit margin if they decided to compete.

Limit Pricing Refers to