Assume That Lexus (L) Is the First Automobile Company to Produce

Assume that Lexus (L) is the first automobile company to produce a luxury class hybrid automobile and is the only such company for the past four years. BMW is now considering producing its own luxury hybrid automobile and Lexus must decide whether or not to lower the price of its luxury hybrid to counter BMW's entry into the luxury hybrid niche.
-Refer to Figure 10 -1. Should Lexus to lower its price in order to deter BMW's entry into the luxury hybrid automobile market?

A) No, it should keep the same price and work to capitalize on its brand loyalty.
B) In terms of profit earned, it makes no difference whether Lexus lowers its price or no; in either case it will make $280 million profit if BMW enters.
C) No, because BMW will enter the market regardless of Lexus' decision about its price.
D) Yes, it will drive BMW out of the market.