Will the price be lower if duopoly firms set price or if they set quantity? Unde

Question

Will the price be lower if duopoly firms set price or if they set quantity? Under what conditions can you give a definitive answer to this question? OA. If duopoly firms produce a heterogenous good, then price will be lower if they set quantity; if the goods are identical, then price will be lower if they set price. O B. Price will always be lower if duopoly firms set price. O C. If duopoly firms produce an identical good, then price will be lower if they set price: if the goods are heterogeneous, then the answer is indeterminate O D. If duopoly firms produce a heterogeneous good, then price will be lower if they set quantity, if the goods are identical, then price will always be the same regardless of whether duopoly firms set price or quantity O E. Price will always be the same regardless of whether duopoly firms set price or quantity

Explanation / Answer

Correct option is A ,because when the goods are identical and the duopolist choose price they choose price equal to MC, but with heterogenous goods setting up price to maximize profit given other firms price will lead to choose higher prices then the price from choosing quantity.

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