Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Decreased competition
B
Strategic pricing
C
Increased market share
D
Consumer surplus
Understanding the Answer
Let's break down why this is correct
Answer
Economic profit is the extra money a company makes after covering all its costs, including opportunity costs. Similarly, market entry refers to the process of a new company starting to sell goods or services in a market. Just as economic profit can attract more businesses to enter a market, the analogy suggests that market entry relates to "Economic Loss. " When a company faces economic losses, it may discourage new businesses from entering the market. For example, if a company in an oligopoly is losing money, it signals to others that the market may not be profitable, leading them to stay out.
Detailed Explanation
When a new company enters a market, it often uses strategic pricing. Other options are incorrect because Some might think that entering a market means less competition; It's easy to think that entering a market automatically means gaining market share.
Key Concepts
Economic Profit
Oligopoly Market Structure
Market Dynamics
Topic
Economic Profit and Oligopoly
Difficulty
hard level question
Cognitive Level
understand
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