When a Firm Sets Its Price on the Basis of the Price

question 54

True/False

When a firm sets its price on the basis of the price being charged by other firms in the market,there is evidence that the firm has market power.

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Definitions:

Long Hedger

An investor who purchases futures contracts or the underlying asset to protect against potential price increases.

Short Hedger

An investor who enters into contracts to protect against potential losses from declining prices in the assets they hold.

Decrease

A reduction in quantity, size, or intensity of a particular activity, value, or level.

Financial Futures Contracts

Agreements to buy or sell financial instruments or commodities at a future date for a price that is established at the time of the contract.