Vertical foreclosure is an example of a firm:
A. engaging in penetration pricing.
B. that merges with a rival firm with the intention of eliminating the rival firm's product from the market.
C. that controls an essential upstream input and raises rivals' costs by refusing to sell to other downstream firms that need the input.
D. engaging in a price-cost squeeze.
Answer: C
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In the Friedman-Lucas money surprise model
A) If actual inflation is higher than anticipated inflation, then output must be above its trend value. B) If actual inflation is higher than anticipated inflation, then output must be below its trend value. C) money is neutral. D) monetary policy does not work.
Which of the following statements is not characteristic of a perfectly competitive industry in long-run equilibrium?Ceteris paribus, there is no tendency for firms to either enter or exit the industry. a. A profit-maximizing firm may produce any output level at which P < LRATC. b. Every firm produces at an output level at which MC = LRATC
c. Ceteris paribus, there is no tendency for firms to either enter or exit the industry. d. No firm earns an economic profit.