The quickest way for aggressive oligopolists to expand production capacity and market power is to
a. erect barriers to entry
b. cut price to sell more
c. raise price to increase profit and apply the profit to research and development
d. merge with a competitor
e. conduct surveys to price discriminate more effectively
D
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La Dila and Swiss Pro are the only two firms in an industry. The firms initially charge equal prices for their products, which are perfect substitutes. What happens if La Dila decides to lower its price slightly?
A) La Dila will lose all its market share. B) Swiss Pro will gain market share. C) La Dila will face the entire market demand. D) Swiss Pro will earn positive economic profits.
Money is assumed to earn
A) no interest at all, being just currency in hand. B) in checkable deposit form a rate below "the interest rate." C) in checkable deposit form a rate equal to "the interest rate." D) in checkable deposit form a rate above "the interest rate."