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Which of the following statements about restricting entry to markets is NOT true? A
Which of the following statements about restricting entry to markets is NOT true?
A. Brand identity and logos are expensive to establish, and entrants may find it very expensive to establish comparable position in the market.
B. Predatory pricing is illegal but very difficult to prove in court
C. Branded products tend to have more elastic demand, which makes it more difficult for entrants to charge high prices and they must stay out of the market.
D. A low-quality seller cannot effectively use a warranty program to keep other firms out of its market
Expert Solution
The correct option is B. Predatory pricing is illegal but very difficult to prove in court
Explanation:
Organizations use various strategies to influence rival firms' action and try to get dominant power in the market. An organization has various opportunities to restrict the entry of new entrants such as licensing, branding, providing quality products, and so on. An organization cannot use predatory pricing in the market as it is the strategy to set the lowest price to attract all the consumers towards the product. It is considered as illegal practice or unfair use of power.
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