Suppose firms in a collusive oligopoly decide to establish their prices at a level that discourages new rivals from entering the industry. This is called

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This practice of establishing prices at a level that keeps potential new rivals from entering the market is known as limit pricing. It is aimed at maintaining the market power of the existing firms, as new entrants are deterred due to the fear of low profits. Mutual interdependence refers to the situation where firms in an oligopoly take into account the actions and reactions of their rivals while making decisions. Pricing the demand curve implies setting prices based on the responsiveness of consumers to price changes. Price leadership is a situation where one firm sets the price for the market, and other firms follow suit. None of these concepts match the scenario given in the question.

Suppose Firms in a Collusive Oligopoly Decide to Establish Their