If we assume that price leadership prevails in a particular industry,what might prevent the leader from announcing a dramatic increase in the price of the product sold?
A) The fear that the AC of the other firms within the industry would decrease.
B) The fear that new firms would be tempted to enter the industry.
C) The fear that one of the other firms would break ranks and increase their price even more.
D) The fear that such action would provide proof that the firms are engaged in overt collusion.
Correct Answer:
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