Question
Reference the following information about the market demand function for questions 1 to 5. These questions are on different types of market structures - monopoly,
Reference the following information about the market demand function for questions 1 to 5. These questions are on different types of market structures - monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market.
The market demand function is given the following equation:P = 4000 - Qwhere Q is the industry's output level.
Question 1
Now suppose the two firms engage in Stackelberg market competition. Assume firm 1 is the leader (first-mover) and firm 2 is the follower firm (second-mover).
What will be the equilibriumoutputlevel produced by theStackelberg leader(first-mover) firm?
Marginal profit function of Stackelberg leader = 1900 - Q1
1900
2150
1150
950
Question 2
What will be the equilibrium output produced by theStackelberg follower(second-mover) firm?
850
950
1150
1350
Question 3
What will be themarket pricein this Stackelberg model?
1050
1350
1150
1275
Question 4
Can you calculate the profit earned by theStackelberg leaderand theStackelberg follower?
$1605,000 and $905,200
$1850,000 and $902,500
$1805,000 and $902,500
$1800,500 and $905,200
Question 5
Can youidentify the resultswe learned from solving this problem on market structure?
The monopoly market output is greater than the oligopoly market output and the oligopoly market output is greater than the competitive industry output.
The competitive market output is greater than the oligopoly market output and the oligopoly market output is lower than the monopoly output.
The competitive market output is greater than the oligopoly market output and the oligopoly market output is equal to the monopoly output.
The competitive market output is greater than the oligopoly market output and the oligopoly market output is greater than the monopoly output
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