Price leadership represents a situation where oligopolistic firms:

Question

Quizplus · Accepted Answer

Price leadership refers to a situation where one dominant firm in an oligopoly sets the price and other firms follow it. This could happen either due to a tacit understanding between the firms or due to the dominant firm's size and market power. In either case, the other firms in the industry accept the dominant firm's price as a benchmark and adjust their prices accordingly. This leads to a degree of coordination in pricing behavior among the firms. Hence, choice D, which refers to tacit collusion, is the best answer. Choices A, B, and C are not necessarily true or relevant to the concept of price leadership.

Price Leadership Represents a Situation Where Oligopolistic Firms