Under price leadership,when firm A suddenly drops its price,what could its competitors interpret by the drop in price?

Question

Quizplus · Accepted Answer

When a firm under price leadership suddenly drops its price, it is often due to observing a change in demand or production. The competitors may interpret this drop as a signal of changing market conditions, and they may adjust their prices accordingly. It is important to note that price leadership does not involve explicit agreements or collusion between firms, so choices A and B are incorrect. Choice C is not a relevant interpretation of price changes under price leadership.

Under Price Leadership,when Firm a Suddenly Drops Its Price,what Could