What is one difference between the Cournot and Stackelberg models?
A) In Cournot, both firms make output decisions simultaneously, and in Stackelberg, one firm sets its output level first.
B) In Stackelberg, both firms make output decisions simultaneously, and in Cournot, one firm sets its output level first.
C) In Cournot, a firm has the opportunity to react to its rival.
D) Profits are zero in Cournot and positive in Stackelberg.
A
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With time, which one of the following strategies would most likely result in an outward shift in the production possibilities curve of an economy?
A. passage of legislation reducing the workweek to 30 hours. B. instituting a tax policy encouraging consumption at the expense of investment. C. instituting a tax policy encouraging investment at the expense of consumption. D. an increase in the marginal income tax rate, which would reduce the work effort of individuals.
Although price searchers can set their prices, the prices they can set are still affected by market conditions.
a. True b. False 2. Suppose firms in a competitive price-searcher market with low barriers to entry are earning an economic profit. Firms will (enter/exit) this market until economic profits are (zero/postive/ negative)