Consider an industry composed of only two firms, each producing an identical product. The two firms have identical constant marginal costs of production, zero fixed costs, and behave as leader-follower (Stackelberg duopolists). Which of the following conditions will hold in equilibrium? a) at least one firm makes zero profit no b) both firms make decisions at the same time yes c) the firm that moves first will make lower profit than the other firm yes d) one of the firms chooses its price first no no e) the combined profit of Stackelberg duopolists is higher than that of Bertrand duopolists yes f) the equilibrium price is greater than the equilibrium price under perfect competition but less than the equilibrium price in a Cournot model of duopoly > > < >

Consider an industry composed of only two firms, each producing an identical product. The two firms have identical constant marginal costs of production, zero fixed costs, and behave as leader-follower (Stackelberg duopolists). Which of the following conditions will hold in equilibrium? a) at least one firm makes zero profit no b) both firms make decisions at the same time yes c) the firm that moves first will make lower profit than the other firm yes d) one of the firms chooses its price first no no e) the combined profit of Stackelberg duopolists is higher than that of Bertrand duopolists yes f) the equilibrium price is greater than the equilibrium price under perfect competition but less than the equilibrium price in a Cournot model of duopoly > > < >

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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