Price matching is a strategic move that seeks to make cheating unprofitable. mus

Question

Price matching is a strategic move that

seeks to make cheating unprofitable.

must generally be announced publicly in order to have the desired effect.

has no usefulness to managers if a simultaneous pricing decision is going to be made only one time.

both a and b

all of the above

34        Price matching

is a strategic commitment.

is a flexible pledge to match any lower prices offered by rivals.

must be irreversible in order to have the desired effect.

both a and c.

both b and c

35        Price leadership

is rather uncommon today.

is a pricing arrangement in which one firm in an oligopoly agrees to act as a cartel manager and set a price that will maximize the profits of all the firms in the oligopoly market.

would not be useful to a dominant firm if it could eliminate all its rivals through a price war.

none of the above

36        Tacit collusion in a market represents a method for

a.         collusion to discourage entry into the market.

b.         a price-fixing agreement when such agreements are legal.

c.         agreeing on price without explicit communication among firms.

d.         cheating on a cartel price.

e.         none of the above

37        To successfully practice price discrimination

a.         the firm must be a pure monopoly

b.         the firm must possess market power

c.         it must be difficult for consumers in one market to sell to consumers in the other market

d.         both a and c

e.         both b and c

Explanation / Answer

33. all of the above - cheating leads to price war. clear information is needed.

34. both a and c - b is not possible as c is applicable.

36. c

Tacit collusion occurs where firms undergo actions that are likely to minimise a response from another firm, e.g. avoiding the opportunity to price cut an opposition. Put another way, two firms agree to play a certain strategy without explicitly saying so.

37 both b and c - price discrimination is not required in monopoly. hence a wont apply

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