Best Lights wants to prevent Bright Lights from entering the light bulb market. If Best Lights expands its capacity, the expansion can lead to all of the following except which one?
A)lower Best Lights' marginal cost
B)decrease Bright Lights' profit from entering the market
C)lower Best Lights' profit- maximizing quantity
D)lower Best Lights' profit- maximizing price

Question

Quizplus · Accepted Answer

Expanding capacity will typically allow Best Lights to produce more units at a lower marginal cost, which could result in a lower profit-maximizing price (Option D) and decrease Bright Lights' profit from entering the market (Option B). However, expanding capacity may also shift the marginal cost curve downward, leading to a lower profit-maximizing quantity, which would be detrimental to Best Lights (Option C). Therefore, Option C is the incorrect statement.

Best Lights Wants to Prevent Bright Lights from Entering the Light