Two Companies Are the Only Snowplow Merchants in a Small

question 30

Multiple Choice

Two companies are the only snowplow merchants in a small town. Inverse market demand curve is P = 100 - 10Q, where Q = q₁ + q₂ (Firm 1's output = q₁; Firm 2's output = q₂) . Each firm has marginal costs of $25. In the Nash equilibrium in this market, Firm 2 produces ____.

• A) 5
• B) 4
• C) 2.5
• D) 2

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Definitions:

Limitation

A legal restriction or time frame within which certain actions must be taken, such as filing lawsuits or making claims, to remain valid or enforceable.

Directly Liable

Refers to the legal responsibility that falls directly on an individual or entity due to their actions or omissions.

Tort Case

A legal case involving a civil wrong that causes harm or loss, leading to legal liability for the person who commits the tortious act.

Principal

The primary party involved in a transaction or agreement, often responsible for the overall terms and conditions.