why B

Question 7 X Incumbent Stackelberg (accommodate) Deter Enter 500 450 Firm 2 150 O Do Not 1000 900 Enter 0 The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. Assuming a fixed cost of entry, the incumbent will deter entry because Selected Answer: @ the potential entrant winds up with zero profit Answers: it is more profitable than accommodating entry it increases consumer surplus the potential entrant winds up with zero profit the incumbent would earn zero profit if it accommodated entry