A price leader is a firm that ____ in the industry.
A) sets the highest prices and has a low market share
B) sets the lowest prices
C) sets acceptable prices and has a dominant market share
D) sets the globally consistent price

Question

A price leader is a firm that ____ in the industry.
A) sets the highest prices and has a low market share 
B) sets the lowest prices 
C) sets acceptable prices and has a dominant market share 
D) sets the globally consistent price

Quizplus · Accepted Answer

A price leader is a firm that sets acceptable prices and has a dominant market share. This firm is typically followed by other firms in the industry in terms of pricing strategy. The dominant market share allows the price leader to have significant influence on the overall price level in the industry. Setting the lowest prices may not necessarily make a firm a price leader, as it may not have a significant market share to affect the industry as a whole. Setting the highest prices would also not make a firm a price leader, as it would not be followed by the other firms in the industry. Setting a globally consistent price is not necessarily a characteristic of a price leader, as pricing strategies may vary across different regions and markets.

A Price Leader Is a Firm That ____ in the Industry