Under Stackleberg competition: a) There is a first-mover advantage. b) There is
ID: 1216487 • Letter: U
Question
Under Stackleberg competition:
a) There is a first-mover advantage.
b) There is a second-mover advantage.
c) Both firms produce the same quantity.
d) Neither firm has an advantage, since both firms earn the same profit.
2.
In the Cournot competition model:
Firms charge the same price as they would if the market were instead perfectly competitive.
Firms achieve the greatest possible joint profit.
Firms charge the monopoly price.
Firms choose the quantity that maximizes their own profit given the choice of the other firms.
3.
Under Stackleberg competition between two firms, if both firms have the same marginal cost:
The total quantity produced is less than under Cournot competition.
Both firms produce the same quantity.
The first mover earns a larger profit than the second mover.
The price is higher than under Cournot competition.
In the Cournot competition model:
a.Firms charge the same price as they would if the market were instead perfectly competitive.
b.Firms achieve the greatest possible joint profit.
c.Firms charge the monopoly price.
d.Firms choose the quantity that maximizes their own profit given the choice of the other firms.
Explanation / Answer
1. Under Stackelberg competition:
a) There is a first-mover advantage.
2. In the Cournot competition model:
d. Firms choose the quantity that maximizes their own profit given the choice of the other firms.
3. Under Stackelberg competition between two firms, if both firms have the same marginal cost:
C. The first mover earns a larger profit than the second mover.
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