Microsoft sets prices for its new line of computers,and Dell and HP follow.This practice is known as:
A) antitrust pricing.
B) price extortion.
C) price leadership.
D) kinked demand behaviour.

Question

Quizplus · Accepted Answer

Price leadership is a situation where a dominant firm in the market sets the prices for its products, and other firms follow. In this case, Microsoft is the dominant firm setting the price for its new line of computers, and Dell and HP are following the price set by Microsoft. This is a common practice in industries where there is little product differentiation, such as in the computer market. Antitrust pricing refers to illegal practices aimed at stifling competition, price extortion is when a firm overcharges for a product, and kinked demand behavior refers to a theory of oligopoly behavior.

Microsoft Sets Prices for Its New Line of Computers,and Dell