Suppose market demand is p = 10 - Q. Firms have a fixed cost of five and no marginal cost. If firm A is the incumbent, can it deter the entry of its rival, firm B?
What will be an ideal response?
Firm B's reaction function is = 5 - (1/2 )qA. The Stackelberg leader quantity is 5 and firm B will produce 2.5. Firm A's profit is 7.5. If firm A produces 6 units for example, firm B's best response is 2 units; however, it would incur a loss and not enter. Firm A's profits would be 19. Thus firm A can deter entry by overproducing.
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Using the data in the table above, the growth rate of real GDP for 2010 is equal to
A) 4.76 percent. B) 10.0 percent. C) 9.09 percent. D) 5.00 percent. E) 7.00 percent.
Fixed costs are
a. costs that vary with output b. always equal to marginal costs c. costs that do not vary with output d. equal to total costs
Standardized coefficients are also referred to as:
A. beta coefficients. B. y coefficients. C. alpha coefficients. D. j coefficients.
Other things the same, a lower real interest rate decreases the quantity of
a. loanable funds demanded.
b. loanable funds supplied.
c. domestic investment.
d. net capital outflow.