Question

a boat company is competing in a boat market with boats. the company drops its price...

a boat company is competing in a boat market with boats. the company drops its price below its cost and in doing so drives the boat company out of the market. once the other company is a monopoly, they reside their price and gain economic profit. this is an example of....

predatory pricing
resale price maintenance
output restrictions
Market decision

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

This is a clear example of predatory pricing

Predatory pricing is the act of setting market prices so low that the other competitors in the market are not able to sustain the competition and are driven out of the market. Hence in this way the firm undertaking this pricing will drive all major competitors out of the market and will try becoming a monopoly. Once it has control of the whole market,it will start charging higher prices and start gainibg profit out of it.

In this scenario, the boat company has attempted to do the same.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Under patent protection, a firm has a monopoly in its production. Market demand is estimated to...
Under patent protection, a firm has a monopoly in its production. Market demand is estimated to be P = 200 – 0.7Q. The firm’s economic costs are given by ATC = MC = $60 per unit. A. Determine the firm’s optimal output, price and economic profit.   B. After the firm’s patent expires, predict the new market output and price under perfect competition. Assume that competing suppliers have the same economic costs as the original producer. What is the new market...
1. A distinguishing characteristic of monopolistically competitive market is A. price discrimination B. differentiated products C....
1. A distinguishing characteristic of monopolistically competitive market is A. price discrimination B. differentiated products C. having long-run economic profits D. having short-run economic losses 2. The Nash equilibrium in a duopoly market would result in A. An equilibrium price higher than the "monopoly price" but a lower equilibrium quantity compared to the " monopoly quantity" B. An equilibrium price higher than a competitive price but a lower equilibrium quantity compared to a monopoly quantity C. an equilibrium quantity higher...
31. If a firm can influence the market price by changing its quantity of output, then...
31. If a firm can influence the market price by changing its quantity of output, then the firm. a. must be a monopoly b. has market power c. will set the price equal to its average total costs d. earns a normal profit in both short-run and long-run 34. A firm will shutdown in the short-run if a. it makes a negative profit. b. the market price is lower than its average total cost (ATC). c. the market price is...
In the wireless telecommunication service market, only two companies are competing, so let's call it Company...
In the wireless telecommunication service market, only two companies are competing, so let's call it Company 1 and Company 2, respectively. Assume that each company spends $10 to provide wireless services to individual consumers. That is, Entity 1's cost function is TC(q1) = 10q1 and Entity 2's cost function is TC(q2) = 10q2. For the convenience of analysis, assume that consumers do not distinguish the quality of the services provided by the two companies. The reverse demand function of the...
                18) A tax on luxury goods such as yachts (expensive private boats) would have all...
                18) A tax on luxury goods such as yachts (expensive private boats) would have all of the following effects except: A. RAISE THE PRICE PAID BY BUYERS OF YACHTS B. REDUCE THE PRICE RECEIVED BY PRODUCERS OF YACHTS AFTER THE TAX IS REMITTED C. RAISE THE TOTAL AMOUNT SPENT ON YACHTS D. REDUCE THE QUANTITY BOUGHT AND SOLD OF YACHTS                 19) In a perfectly competitive market for some product it is assumed that A. THE PRODUCTS SOLD BY...
For many years, Leno corporation has used a straigtforwad cost-plus pricing system, marking its goods up...
For many years, Leno corporation has used a straigtforwad cost-plus pricing system, marking its goods up approimately 25 percent of total cost. The company has been profitable, however, it has recently lost conciderable business to foreign competitors that have become very aggressive in the marketplace. These frims appear to be using target costing . An example of Leno’s problem is typified by tiem8979 which as the following unit cost characteristic Direct marterial $80 Direct labor 210 Manuvaturing overhead 130 Selling...
32. If the company E-bikes R US is a price taker, then its marginal revenue will...
32. If the company E-bikes R US is a price taker, then its marginal revenue will always equal A) price. B) total cost. C) zero. D) one. 33. The company E-bikes R US operates in a competitive market. If E-bikes R US is in short-run equilibrium, then A) profits equal zero. B) it will not operate at a loss. C) an increase in its fixed cost will have no effect on profit. D) an increase in its fixed cost will...
Skysong Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis....
Skysong Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item No. Quantity Cost per Unit Cost to Replace Estimated Selling Price Cost of Completion and Disposal Normal Profit 1320 1,500 $3.39 $3.18 $4.77 $0.37 $1.33 1333 1,200 2.86 2.44 3.71 0.53 0.53 1426 1,100 4.77 3.92 5.30 0.42 1.06 1437 1,300 3.82 3.29 3.39 0.27 0.95 1510 1,000 2.39 2.12 3.45 0.85 0.64 1522 800 3.18 2.86 4.03 0.42 0.53 1573 3,300 1.91...
1. For a perfectly competitive firm in the short run, the ____________ price is at minimum...
1. For a perfectly competitive firm in the short run, the ____________ price is at minimum average variable cost and the break-even price is at minimum ________ cost.    a. Shut-down: Marginal b. Shut-down: Average c. Operating: Average d. Operating: Marginal 2. The short-run supply curve for a perfectly competitive firm is a _______ line at zero quantity if the price is below minimum average variable cost but is the marginal cost if the price is at or above minimum...
Q-1: Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost...
Q-1: Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost Marginal Cost Average Total (Units) ($) ($/unit) Cost ($/unit) 0 50 -- -- 10 120 7=(120-50)/(10-0) 12=(120-10) 20 170 ? ? 30 210 ? ? 40 260 ? ? 50 330 ? ? 60 430 ? ? Total costs include a "normal" return on the time (labor services) and capital that the owner has...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT