Suppose That Two Manufacturers Produce Identical Fireproof Safes at a Constant

question 78

Multiple Choice

Suppose that two manufacturers produce identical fireproof safes at a constant marginal cost of $90. The market inverse demand curve for fireproof safes is P = 450 - 2Q, where Q is the total output of fireproof safes produced by the two manufacturers, q₁ + q₂. The firms compete by simultaneously choosing their quantity to produce. At Nash equilibrium, what is the market price of a fireproof safe?

• A) $340
• B) $210
• C) $160
• D) $130

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Definitions:

Selling Price

The charge or fee extended to the purchaser for a product or service, typically aiming to cover costs and generate profit.

Advertising Budget

The amount of money allocated for promoting a product, service, or brand during a specific period.

Break-even

A position where overall costs and revenues balance out, culminating in zero net profit or loss.

Monthly Unit Sales

The total number of units of product sold in a month, often used to monitor sales trends and performance.