In which of the following situations would a seller be better able to survive a price war than other sellers in a given market?
A)The seller has lower marginal revenue than other sellers in the market.
B)The seller has lower switching costs than other sellers in the market.
C)The seller has lower demand than other sellers in the market.
D)The seller has cost curves that are lower than those of other sellers in the market.

Question

Quizplus · Accepted Answer

If a seller has lower cost curves than other sellers in the market, they will be better equipped to lower prices without sacrificing profit margins. This means they can undercut competitors, survive the price war, and potentially even gain market share. Lower marginal revenue (A) and lower demand (C) would make it harder for the seller to lower prices and stay profitable. Lower switching costs (B) could provide some advantage, but it would likely not be as significant as having lower cost curves.

In Which of the Following Situations Would a Seller Be