In the Stackelberg model, suppose the first-mover has MR = 15 - Q1, the second firm has reaction function Q2 = 15 - Q1/2, and production occurs at zero marginal cost.
Why doesn't the first-mover announce that its production is Q1 = 30 in order to exclude the second firm from the market (i.e., Q2 = 0 in this case)? A) In this case, MR is negative and is less than MC, so the first-mover would be producing less than the optimal quantity.
B) In this case, MR is negative and is less than MC, so the first-mover would be producing too much output.
C) This is a possible outcome from the Stackelberg duopoly under these conditions.
D) We do not have enough information to determine if this is an optimal outcome for this case.
Question 2
A firm has two customers and creates a two-part tariff with a usage fee (P) that exceeds the marginal cost of production and leaves each customer with positive consumer surplus such that CS2 > CS1 > 0.
If the firm sets the entry fee equal to CS2, then the number of customers that actually buy the product is equal to: A) zero.
B) one.
C) two.
D) We don't have enough information to answer this question.
Eye Model
Information Processing Model The components of the model operate simultaneously.
The Holliday model for homologous recombination
Computationally assembled model of the TFIIA–TBP–TFIIB–promoter complex based on crystal
IPCC model projections depend on greenhouse gas emissions
Three-Box Model