Barometric price leadership exists when
A)one firm in the industry initiates a price change and the others may or may not follow.
B)one firm imposes its best price on the rest of the industry.
C)when all firms agree to change prices simultaneously.
D)when one company forms a price umbrella for all others.

Question

Quizplus · Accepted Answer

Barometric price leadership occurs when one leading firm in an industry initiates a price change and the other firms may or may not follow. The leading firm takes into account the market conditions, cost structures, and demand elasticity to set a price that the others follow. However, the other firms have the option to deviate from the price set by the leader. Therefore, the correct option is A.

Barometric Price Leadership Exists When