A differentiated product is one that:
a. is slightly different from the competitor's product, although it is a close substitute.
b. is very different.
c. is traded within firms and is not for sale in retail markets.
d. has a shelf life of less than a year.
Ans: a. is slightly different from the competitor's product, although it is a close substitute.
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Consider a market with (inverse) demand p = 100 - 2Q. There are two firms in the market with constant marginal and average costs of $10
a. Determine the Cournot equilibrium quantities and price b. What would be the collusive (joint-profit maximizing) price and quantity? c. Derive the deadweight loss from (i) Cournot Dupoly, (ii) Collusion, and (iii) Perfect competition in this market with the two firms.
If companies who took into account an externality want to supply less at any given price compared to the original market supply, it must be a:
A. negative externality. B. social externality. C. positive externality. D. network externality.