Which of the following assumptions is critical to the Bain, Modigliani, Sylos-Labini model?

Question

Quizplus · Accepted Answer

The critical assumption of the Bain, Modigliani, Sylos-Labini model is that the potential entrant believes the incumbent firm will continue to produce at its pre-entry level of output regardless of any actions the entrant takes and regardless of the prevailing market price. This assumption forms the basis of the model's analysis of strategic behavior and market entry. The other choices are also important assumptions, but they are not critical to the model's core analysis.

Which of the Following Assumptions Is Critical to the Bain