The demand faced by an industry price leader is:?

Question

a. market demand.

b. market demand plus the demand for output by follower firms.

c. market demand less the supply of output by follower firms.

d. kinked.

Answer 1

d. kinked.

It will always be kinked for price-leader, because below price-leader price other member of oligopoly start to react as price-followers (they will react for decrease in prices), and price-increases for price-leader are not very profitable (because consumers will tend to move to price-followers - thus redistributing market-share).

Answer 2

c    altho i am a little tempted by a