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

[gbarreiro]

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

[matt]

Answer to Question 1

B

Answer to Question 2

D

[gbarreiro]

TYSM

[duy1981999]

Excellent