Sanford Inc. currently competes in a duopoly. The market price is $10 and Sanford’s annual profit is $10 million.

Sanford Inc. currently competes in a duopoly. The market price is $10 and Sanford’s annual profit is $10 million. If Sanford were the only firm in the market, it could charge the monopoly price of $25 per unit and earn $35 million annually for an indefinite period of time. By charging $5 per unit for one year, Sanford could drive its rival out of the market and maintain a monopoly position indefinitely. However, this strategy will result in a $20 million loss since its marginal cost is $8 per unit. a. What pricing strategy is the manager considering?b. Ignoring legal considerations, is this pricing strategy profitable? Assume the interest rate is 5 percent and, for simplicity, that any current period profits or losses occur immediately (at the beginning of the year)

.button {
background-color: #4CAF50;
border: none;
color: white;
padding: 10px 20px;
text-align: center;
text-decoration: none;
display: inline-block;
font-size: 16px;
margin: 4px 2px;
cursor: pointer;
border-radius: 10px;
}
.awasam-alert {
color: red;
}

“Are you looking for this answer? We can Help click Order Now”