Question
Imagine that there is a single firm supplying the whole chewing gum market. You discover that it is charging an almost-breakeven price despite the fact
Imagine that there is a single firm supplying the whole chewing gum market. You discover that it is charging an almost-breakeven price despite the fact that it could charge a higher price and thereby make larger profits. Assuming the firm is rational, what is the most plausible explanation for the the firm's apparently odd behavior?
The firm is experiencing significant diseconomies of scale due to management coordination problems
The firm is run by kind and charitable managers
The firm is unaware of demand for its product
The chewing gum market is contestable
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
