Deterring entry might require a firm to
A) price their product closer to the competitive price than to the monopoly price.
B) price their product closer to the monopoly price than to the competitive price.
C) drop output almost to zero to show the consumers "who's boss."
D) drop price almost to zero to get price below marginal cost.

Question

Quizplus · Accepted Answer

Deterring entry often involves a firm pricing its product closer to the competitive price than to the monopoly price. This strategy makes the market less attractive to potential entrants by reducing the available profits, thereby helping the incumbent firm maintain its market position. Pricing closer to the monopoly price would likely attract new entrants by signaling higher available profits in the market.

Deterring Entry Might Require a Firm to