The dominant firm case of price leadership is characterized by all of the following EXCEPT:
A) a firm with lower marginal and average costs
B) a firm which can sustain losses for a period of time
C) a firm which can establish a monopoly price based on the market demand curve
D) a firm which has the ability to drive smaller rival firms from the market.
E) the threat of action by the anti-trust division of the Justice Department under the predatory price cutting rules if it was felt that the dominant firm had cut its price to an unreasonably low level in order to eliminate competition.
Correct Answer:
Verified
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A)
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Q45: Price rigidity:
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Q47: The dominant firm case of price leadership
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