In a price leadership oligopoly model,
A) a cartel of leading firms determines price and industry output
B) the leading firm colludes on price with each of the other firms and in this way has primary decision-making powers over price
C) one firm is the price leader and all other firms in the industry follow
D) the firm that leads abandons the profit-maximizing goal
E) the leader firm produces where MR = MC, and all others produce where P = ATC

Question

Quizplus · Accepted Answer

In a price leadership oligopoly model, one firm typically sets the price for the industry, and the other firms follow this lead, adjusting their prices accordingly rather than engaging in price competition. This firm is considered the price leader.

In a Price Leadership Oligopoly Model