During the 1990s,one of the dominant firms in the U.S.cigarette industry would raise prices once or twice a year by about 50 cents per carton.Other firms in the industry typically raised their prices by the same amount.This is an example of _____.

Question

Quizplus · Accepted Answer

This is an example of price leadership, where the dominant firm sets the pricing standard for the industry and other firms follow suit. There is no evidence of predatory pricing (lowering prices to drive competitors out of the market) or price skimming (charging high prices for a new or unique product). Profit maximization and Sweezy oligopoly (where firms restrict output and collude on prices) may be applicable, but they are not the best choice given the given information.

During the 1990s,one of the Dominant Firms in the U