Consider the dominant firm price leadership model. Suppose there is an increase in fringe firms’ supply. We would predict the following changes in the market: A.the dominant firm price would rise, and its quantity would fall. B.the dominant firm price would fall, and its quantity would fall. C.the dominant firm price would rise, and its quantity would rise. D.the dominant firm price would fall, and its quantity would rise. E.the dominant firm price and quantity would be unchanged.

Meaning of Market: The term market refers to the situation under which the producers or the…

Answered: Consider the dominant firm price…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter11: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 7CQ

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Consider the dominant firm price leadership model. Suppose there is an increase in fringe firms’ supply. We would predict the following changes in the market:

	A.	the dominant firm price would rise, and its quantity would fall.
	B.	the dominant firm price would fall, and its quantity would fall.
	C.	the dominant firm price would rise, and its quantity would rise.
	D.	the dominant firm price would fall, and its quantity would rise.
	E.	the dominant firm price and quantity would be unchanged.

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