Suppose firms in a collusive oligopoly decide to establish their prices at a level that discourages new rivals from entering the industry.This is called:

A) mutual interdependence.
B) pricing the demand curve.
C) limit pricing.
D) price leadership.

This pricing strategy is known as limit pricing. By setting their prices at a high enough level, the established firms are able to discourage new rivals from entering the market. This is because potential entrants would not be able to earn enough profit at the prevailing prices to justify the costs of entry. Mutual interdependence refers to the situation where firms' pricing decisions are influenced by the actions of their competitors. Pricing the demand curve is a strategy where firms set their prices based on the elasticity of demand. Price leadership occurs when one firm sets the price for the market, and other firms follow.