Which of the Following Correctly Explains the Dominant Firm Model

question 24

Multiple Choice

Which of the following correctly explains the dominant firm model of an oligopoly?

• A) The firm that sets the lowest price gains the entire market share.
• B) A single firm sets a price which is lower than the current market price and gains market share at the expense of the other firms.
• C) A single firm sets the price in the market, which is taken as given by the other smaller firms.
• D) Each firm in the market sets its price based on the reaction of the other firm.
• E) The firms in the market collude and set prices in order to maximize their combined profits.

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Definitions:

Intercalated Discs

Specialized structures in cardiac muscle cells that facilitate cell-to-cell communication and contraction through gap junctions and desmosomes.

Terminal Cisternae

Enlarged areas of the sarcoplasmic reticulum around the muscle's transverse tubules involved in calcium storage and release.

T-tubules

Tubular extensions of the cell membrane into muscle cells, facilitating rapid transmission of action potentials to ensure efficient contraction.

Desmosomes

Specialized cell structures that function as anchors, attaching cells together within tissues like the skin and heart muscle.