Suppose the Outboard Motor Market Is Characterized by Stackelberg Competition

question 48

Multiple Choice

Suppose the outboard motor market is characterized by Stackelberg competition. The market inverse demand curve for outboard motors is P = 10,000 - 50Q, where Q is the total market output produced by Mercury Marine and Yamaha, q_M + q_Y. Suppose that the marginal cost for both firms is constant at $1,000. If Yamaha is the first-mover, what is the equilibrium price?

• A) $1,800
• B) $2,600
• C) $3,250
• D) $4,000

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Definitions:

Defined Contribution Plan

A retirement plan where an employee, employer, or both make contributions on a regular basis, but the final benefit received depends on the plan's investment performance.

Risk-free Return

The theoretical return on an investment with zero risk of financial loss, typically associated with government bonds.

Standard Deviation

A statistical measurement that depicts the variation or dispersion of a set of values, commonly used in finance to measure the volatility or risk of an investment.

Defined Contribution Plan

A type of retirement savings plan where the amount contributed to the plan is defined, but the future benefit amounts are not guaranteed.