A profit-maximizing oligopolist should set a price by using:
A) target return pricing.
B) average-cost pricing.
C) leader pricing.
D) marginal analysis.
E) cost-oriented pricing.

Question

Quizplus · Accepted Answer

A profit-maximizing oligopolist should set price by using marginal analysis, which means they should compare the marginal cost of production to the marginal revenue they will receive from selling an additional unit. This allows the oligopolist to find the price that will maximize their profits. Target return pricing, average-cost pricing, leader pricing, and cost-oriented pricing do not take into account the specific conditions of oligopoly markets and may result in suboptimal pricing strategies.

A Profit-Maximizing Oligopolist Should Set a Price by Using