A Single Firm That Charges the Monopoly Price in the Market

Multiple Choice

A single firm that charges the monopoly price in the market earns $1,300.If another firm successfully enters the market,the incumbent's profits fall to $700 and the entrant earns $575.If the interest rate is 0.5,how high must the firm's profits from limit pricing be for limit pricing to be a profitable strategy for the incumbent?

A) π^L > $200
B) π^L > $500
C) π^L > $900
D) π^L > $1,000