A firm that decides to make a price cut assumes that marginal profit is negative.

Name: A firm that decides to make a price cut assumes that marginal profit is negative.
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Question

Quizplus · Accepted Answer

Not necessarily. A firm may also make a price cut in order to increase market share or to stay competitive in the market, even if it means temporarily sacrificing some profits. The marginal profit may still be positive, but less than it would have been without the price cut.

A Firm That Decides to Make a Price Cut Assumes