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vlabodo [156]
3 years ago
12

Firm A and Firm B are the only two companies that sell mail-order DVD rental subscriptions. For several years, Firm A priced its

subscriptions below average variable cost. Firm B tried to compete by also selling subscriptions below average variable cost, but went bankrupt and exited the market. Several months after Firm B exited the market, Firm A raised prices by 40 percent and is currently earning large, positive economic profits. Based only on this information, an argument can be made that:____________.
A. the mail-order DVD rental subscription market is a monopolistically competitive market.
B. Firm A engaged in predatory pricing.
C. Firm B must have made bad business decisions because it went bankrupt.
D. Firm B engaged in predatory pricing.
E. FirmA and Firm B must have had a collusive agreement
Business
1 answer:
timurjin [86]3 years ago
6 0

Answer:

B. Firm A engaged in predatory pricing.

Explanation:

Since Firm A and B are the only two companies that sell this good

Firm A decided to price its subscriptions below average variable cost that is it lowered it's prices which made Firm B to also lower it's own, but they went bankrupt and exited the market. Firm A then raised prices by 40% and is currently earning large, positive economic profits.

Based on this, Firm A engaged in predatory pricing.

Predatory pricing is a marketing or pricing strategy that has to do with lowering the cost of goods and services for a short-term, in order to make competitors lower their price, making them to go bankrupt in the process and thereby exiting the market.

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1 year ago
One of your associates continues to make the same mistake when stocking shelves you have provided him with this feedback multipl
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Answer:

Likely, I would approach the associate to review the problem. I would probably start by demonstrating how I'd like the shelves to be stocked. Then ask if the associate has any further questions. Sometimes things get lost in translation, and the best way to clear up a situation is to demonstrate how it should be done.

Explanation:

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2 years ago
What type of mining is used for both coltan and gold?
almond37 [142]

Open pit mining

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6 0
3 years ago
Which position or group of stakeholders has the most power in your organization or one with which you are familiar? Is their pow
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The stakeholder group with the most power over the organization is the board, whose power is gained through formal positions.

<h3 /><h3>How is the board of directors formed?</h3>

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2 years ago
Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.25 at the end of the year. Its div
tino4ka555 [31]

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The expected/required rate of return is 13.8125%.

Explanation:

The stock is a constant growth stock as the dividends are expected to grow constantly forever. The constant dividend growth model of DDM is used to calculate the price of such a stock today. As we already know the price, we will use the formula of the constant growth model to determine the required rate of return. The formula for constant growth model is:

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3 0
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