What Is the Potential Drawback If Firms Follow a Price

question 34

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 interpreted 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:

Leadership Diversity

The presence of a culturally heterogeneous group of leaders.

Heterogeneous Group

A diverse collection of individuals with varying characteristics, backgrounds, and skills coming together for a common purpose.

Multilingual

The ability to use and understand multiple languages proficiently.

Multicultural

Pertaining to, or representing several different cultures or cultural elements.