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An Incumbent Firm Uses Limit Pricing

Question 34

Multiple Choice

An incumbent firm uses limit pricing


A) to set price below a potential rival's marginal cost, thus making entry unprofitable.
B) to set one price for a quantity of a good below a certain limit, and a second price for purchases above the limit.
C) when it has no other advantages over a potential rival.
D) if it is limited in the quantity of inputs it can purchase to produce output.

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