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A single firm that charges the monopoly price in the market earns 1,000. If another firm successfully enters the market, the incumbent's profits fall to
A single firm that charges the monopoly price in the market earns 1,000. If another firm successfully enters the market, the incumbent's profits fall to 500 and the entrant earns 400. If the incumbent engages in limit pricing, its profits are 600. For what interest rate, i, is limit pricing a profitable strategy for the incumbent? Multiple Choice i < 0.25. 0.25 < i < 1. 0.25 < i < 0.75. i > .75
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