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Consider the following table: Company A Company B Rent and Utilities $5,000 $7,000 Materials $4,500 $7,500 Current Output 6,000 10,000 The owner of Company B
Consider the following table: Company A Company B Rent and Utilities $5,000 $7,000 Materials $4,500 $7,500 Current Output 6,000 10,000 The owner of Company B is considering starting a price war with Company A to eliminate a smaller competitor in its industry. Would it be a wise decision for Company B to enter a price war with Company A? No, because Company A has more flexibility to increase output and lower costs. Yes, because Company B's cost structure allows it to lower prices further than Company A. No, because Company B cannot price low enough to force Company A to exit the industry. Yes, because Company B has greater market share than Company A
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