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JAMB Economics 1988 Question 25

Question 25

Market Structures

Price leadership is

  1. A.a form of tacit collusion
  2. B.used to explain price rigidity
  3. C.illegal in Nigeria
  4. D.a form of overt collusion.
Show the answer and explanation

Answer: A (a form of tacit collusion)

Explanation

Under price leadership, firms follow the price set by a leading firm without any formal agreement; this is tacit (unspoken) collusion.