Author Question: An incumbent's threat to use limit pricing if a firm enters the market A) is credible if the ... (Read 43 times)

gbarreiro · **on:** Jul 1, 2018

An incumbent's threat to use limit pricing if a firm enters the market

A) is credible if the firms have identical costs and market demand supports both firms.
B) is credible if the firms have different costs and market demand won't support both firms.
C) is not credible if the firms have different costs and market demand won't support both firms.
D) is cheap talk, because the other firm will enter and the incumbent will still be able to charge monopoly pricing.

Question 2

The kinked demand curve model best reflects

A) mutual interdependence among sellers.
B) a game theory approach to price-output decisions.
C) price rigidities in oligopolistic markets.
D) All of the above