Suppose two duopolists operate at zero marginal cost. The market demand is p = a - bQ. If firm 1 is the Stackelberg leader, what level of output will it choose?
A) q1 = (a - bq2)/2b
B) q1 = (a - 2bq2)/2b
C) q1 = a/b
D) q1 = a/2b
D
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Other things the same, if the price level rises, people
a. increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. b. increase foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases. c. decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange increases. d. decrease foreign bond purchases, so the supply of dollars in the market for foreign-currency exchange decreases.
An example of a positive externality is
A. Increased factory use of private sector robotics that came from government research. B. Increased business profits at a hardware store that benefited from a tornado. C. Increased health problems from air pollution. D. None of the choices are correct.