For the entry deterrence example we discussed today, $[$Market demand Q$($p$)=100-$ p$,$ the incumbent firm's marginal cost MC $=20,$ the entrant's marginal cost MC $=20]$

$($A$)$ The incumbent firm's strategy if F $=300$ will be entry deterrence. $($F is the Entrant's fixed entry cost.$)$

$($B$)$ If F $=300$ entry deterrence is socially optimal.

$*$

$($A$)$ is true; $($B$)$ is false

$($A$)$ is false; $($B$)$ is true

Both $($A$)$ and $($B$)$ are false

Both $($A$)$ and $($B$)$ are true

Answer rating: 100% (QA)

Lets analyze the given statements A The incumbent firms strategy ... View the full answer