The steel industry is differentiated into three segments: A, B, and C. In March 2008, Nucor in the market segment of A cut its product price by 20%. Which of the following statement best describes the potential impact of Nucor’s price cutting? Nucor’s price cutting is likely to create stronger competition pressure on firms in Segment A than on firms in Segment B and C. Nucor’s price cutting is likely to create stronger competition pressure on firms in Segment A than on firms in Segment B but not those in Segment C. Nucor’s price cutting is likely to create equal competition pressure on firms in Segment A, B, and C. Nucor’s price cutting is likely to create stronger competition pressure on firms in Segment B and C than on firms in A.
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