Question 1
The price-leadership model assumes a dominant firm allows the smaller firms to sell ________ at the price the leader has set.
◦ any quantity they choose
◦ no output
◦ only the quantity of output chosen by the dominant firm
◦ a pre-negotiated quantity
Question 2
Predatory pricing
◦ is often an inexpensive way for a large firm to drive smaller firms out of a market.
◦ is usually quite effective at driving smaller firms out of a market.
◦ is illegal under antitrust laws.
◦ is a form of price leadership.