What Is the Potential Drawback If Firms Follow a Price

question 49

Multiple Choice

What is the potential drawback if firms follow a price leadership model in an actual market?

• A) The price leader's behavior may be interpretted as collusion and be subject to antitrust sanctions.
• B) Excessive price signalling may force all of the firms to adopt price-taking strategies, which reduces overall profits among the firms.
• C) Disputes about which firm should be the price leader may lead to price wars.
• D) Signalling efforts increase the firms' fixed costs of production.

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Definitions:

Beating Flagella

Flagella that exhibit a whip-like motion to propel cells through liquid environments, common in many single-celled organisms and the sperm of many multicellular organisms.

Motile Larvae

Larval forms of certain animals capable of movement, often playing a crucial role in dispersal and the life cycle.

Adaptation

The process by which organisms adjust to changes in their environment through genetic change or behavior to enhance survival and reproduction.

Living on Land

The adaptation of life forms to survive and thrive in terrestrial environments, as opposed to aquatic or marine habitats.