The demand curve facing a dominant firm in the ________ model is derived by subtracting the amount supplied by the smaller firms from market demand.
A) price leadership
B) Cournot
C) cartel
D) collusion

Question

Quizplus · Accepted Answer

In the price leadership model, the dominant firm sets the price for the market, and the demand curve it faces is determined by subtracting the output of the smaller firms from the total market demand. This allows the dominant firm to determine its own output level based on the residual demand it faces after accounting for the supply from the smaller firms.

The Demand Curve Facing a Dominant Firm in the ________