An incumbent usually charges a higher price than a new, Ask an Expert

Economics

An incumbent usually charges a higher price than a new entrant does. Which of the following is a plausible reason for this observation?

A. An incumbent usually has a bigger bureaucratic body than a new entrant does and hence has a higher marginal cost.

B. Consumers are risk averse, hence new firms charge lower prices to attract customers.

C. The incumbent is ignorant of the new entrant; hence it is still charging the old high price.

D. All of the statements associated with this question are correct.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91236228

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