The price-leadership model does not assume the

A) demand elasticity in response to an increase in price is different from the demand elasticity in response to a price cut.
B) industry is made up of one large firm and a number of smaller, competitive firms.
C) dominant firm maximizes profit.
D) dominant firm allows the smaller firms to sell all they want at the price the leader has set.

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Taylor Renee · Accepted Answer

Final Answer : A, Explanation :  The price-leadership model assumes that the demand elasticity for price increases and decreases is the same, contrary to option A, which states it assumes these elasticities are different. This model typically involves a dominant firm setting prices that others follow, assuming similar demand responses to price changes in both directions.

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