Price ________________ is an informal method that firms in an oligopoly may employ to set the price of their product: One firm (the leader) is the first to announce a change in price, and the other firms (the followers) soon announce identical or similar changes. Question 7 (1 point)

Respuesta :

Answer:

The correct answer is Leadership.

Explanation:

Price leadership is a form of tacit collusion in which members of the oligopoly decide to set the same price that the industry leader set.

The Price Leader may be the lowest cost company or the largest company in the industry.

  • There is a leading company (it dominates prices).
  • There is a competitive group (price accepting).
  • The leader takes into account the reactions in the market to set prices and production.
  • Leadership can be profitable for the dominant oligopolist.

A company has price leadership when pricing the products of its industry and other companies, often much lower than the leader, always with adjustments. This generally happens when the products do not show great differences nor is there sufficient demand for each of the competitors to remain profitable after the price change.