Limit pricing refers to
A) the fact that a monopoly firm always sets the highest price possible.
B) how the price is determined in a kinked demand curve model of oligopoly.
C) a situation in which a firm might lower its price to keep potential competitors from entering its market.
D) none of the above.
C
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In a free market, the market price and quantity in the above figure will adjust to equilibrium values of
A) $1 per gallon and 50 million gallons. B) $4 per gallon and 10 million gallons. C) $2 per gallon and 60 million gallons. D) $2 per gallon and 30 million gallons.
Under a rule of reason approach, which of the following would be legal in the United States?
a. the merger of two small companies in an unconcentrated market b. price fixing between IBM and Compaq c. the merger between Ford and General Motors d. Kellogg's and General Mills collude to drive Quaker Oats out of the business e. Exxon Oil and Mobil Oil elect the same person to their boards of directors