Multiple choice

Which of the following statements is incorrect about low-cost price leadership model in an oligopolistic firm?

  1. There are two firms.

  2. There are few buyers.

  3. They have identical demand and marginal revenue curves.

  4. The market industry demand curve for the product is known to both the firms.

  5. The costs of the firms differ; one is a low-cost firm and the other is a high-cost firm.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This option is incorrect because low-cost price leadership model in an oligopolistic firm assumes that there are large number of buyers.

Keep practicing — related questions