Asked by Angelique Cobilla on May 11, 2024
Verified
If one of the nation's leading banks raises the prime rate of interest by a half of a percent,and within 24 hours all of the other U.S.banks raise their prime rates by the same percentage,this behavior would be
A) an example of covert collusion.
B) proof of the U.S.bank cartel at work.
C) an example of illegal cutthroat price competition at work.
D) an example of price leadership.
Prime Rate
The interest rate that commercial banks charge their most creditworthy customers, usually large corporations.
Covert Collusion
Covert Collusion occurs when businesses secretly cooperate to fix prices, limit supply or engage in other anticompetitive practices without public or regulatory knowledge.
Price Leadership
A market situation where one leading company sets the price for goods or services, which other competitors in the market then follow.
- Identify strategies and behaviors unique to oligopolistic firms, including collusion and price leadership.
Verified Answer
Learning Objectives
- Identify strategies and behaviors unique to oligopolistic firms, including collusion and price leadership.
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