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Homework answers / question archive / Select the correct statements
Select the correct statements. Note: Multiple correct, multiple selections. Topics covered: Stackelberg, Cournot, and Bertrand models. A. In Cournot duopoly, if each firm has the same marginal MC = K, each firm produces the same level of output and earns the same profit. B. A Stackelberg leader will necessarily make at least as much profit as he would if he acted as a Cournot oligopolist. O C. Suppose, in a Stackelberg duopoly, the follower's output is measured on the horizontal axis. Profits to the follower will increase as we move to isoprofit lines that are further to the left. D. The equilibrium in Bertrand duopoly where both firms sell identical products is Pareto efficient. OE. Suppose the inverse market demand function is P (y) = a - by, and the marginal cost of each firm is K (same and constant). In this market, the market price will be higher if the market is a Stackelberg duopoly than the market price if it is a Cournot duopoly market.
