Consider two firms that sell undifferentiated products for which the demand is linear. Assume that both firms have the same constant marginal cost and no fixed costs.

• Let Mdenote the profit either firm would earn if it were the only firm in the market. You should assume Mis positive.
• Let Cdenote the profit each firm would earn in the two-player, simultaneous-move Cournot game.
• Let Ldenote the profit either firm would earn if it chose its quantity as the Leader in the sequential-move Leader-Follower game.

Which of the following relationships holds?

Select the single, best answer to the question.

Group of answer choices

a) C

b) C

c) L

d) L

e) M