The Presence of a Price Leader in an Oligopolistic Industry

question 66

Multiple Choice

The presence of a price leader in an oligopolistic industry

• A) implies that one firm can consistently charge the highest price.
• B) allows firms to coordinate their behavior short of outright collusion.
• C) decreases the profits of all other firms.
• D) is illegal according to the Sherman Antitrust Act.
• E) leads naturally to cost-plus pricing by other firms in the industry.

---

Definitions:

MIRR

Modified Internal Rate of Return, a financial measure used to evaluate the attractiveness of investments, adjusting for the cost of capital and reinvestment of cash.

IRR

Stands for Internal Rate of Return, which is a financial metric used to estimate the profitability of potential investments.

WACC

The Weighted Average Cost of Capital is a method of determining a corporation's cost of capital, with each capital category being weighted in accordance with its relative proportion.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows equal to zero.