The Demand Function in a Duopoly Is: P = 100

question 11

Multiple Choice

The demand function in a duopoly is: P = 100 - 2(Q1 + Q2) ,where P = price,Q1 = output of the firm,and Q2 = output of the second firm.If the first firm decides to sell 10 units while the second firm sells 20 units,which of the following will be true?

• A)The second firm will earn twice as much revenue as the first firm.
• B)The second firm will sell at a lower price than the first firm.
• C)An increase in one firm's output will not affect the other firm's revenue.
• D)The first firm will earn a higher profit than the second firm.
• E)The market price will be determined by the second firm's output which is larger than the first firm's output.

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Definitions:

Equilibrium Conditions

A state in a market where the quantity of a good supplied equals the quantity demanded, resulting in market stability and no pressure for price changes.

Supply Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity that suppliers are willing to offer for sale over a given period.

Capital Flow

The movement of money for the purpose of investment, trade, or business production.

Zero-Profit Equilibrium

A market condition where firms earn just enough revenue to cover their total costs, resulting in no economic profit.