Which of the following is a correct statement?
A)Predatory pricing is easy to prove in the court of law.
B)An incumbent firm may experience a learning curve that allows it to produce at a lower cost than a potential entrant.
C)A firm receives no individual benefit from strategies that raise the marginal costs of its rivals.
D)No individual firm can benefit from strategies that raise the fixed costs of all the firms in the industry.

Question

Quizplus · Accepted Answer

This statement is true as an incumbent firm may experience a learning curve that allows it to produce at a lower cost than a potential entrant due to its accumulated experience and expertise over time. The other options are not completely accurate. Predatory pricing is difficult to prove in court as it requires evidence of intent to drive competitors out of the market. A firm may benefit from strategies that raise the marginal costs of its rivals if it can maintain its lower cost structure. Similarly, a firm may benefit from strategies that raise the fixed costs of all the firms in the industry if it can afford the increased costs and it makes entry less attractive for potential competitors.

Which of the Following Is a Correct Statement