The following question relates to an oligopoly market where the industry demand curve is P = 100 - Q. If firm 1 is a Stackelberg leader and firm 2 is a follower, what will each firm produce?
What will be an ideal response?
P = 100 - (Q1 + 50 - .5Q1) P = 100 - .5Q1 - 50 P = 50 - .5Q1 MR = 50 - Q1 0 = 50 - Q1 Q1 = 50 Q2 = 50 - .5(50) = 25
You might also like to view...
The longest period of deflation in the U.S. in the 20th century was during World War II
Indicate whether the statement is true or false
Money is a ________ and a transaction is a ________
A) stock; stock B) flow; flow C) flow; stock D) stock; flow
In the classical model,
A. full employment will never be reached. B. wages will go up but never go down. C. unemployment will never exist because employers will be willing to pay the wage rate demanded by the workers. D. unemployment will never exist since workers will be willing to accept lower wages and will then be able to find work.
If the quantity of tacos is measured along the horizontal axis and the quantity of movies is measured along the vertical axis, and the price of a taco is $2.00 while the price of a movie is $12, then the slope of the budget line is
A. -1/3. B. -1/6. C. -6. D. -3.5