A New Firm Enters a Market Which Is Initially Serviced

question 76

Multiple Choice

A new firm enters a market which is initially serviced by a Cournot duopoly charging a price of $20.What will the new market price be should the three firms coexist after the entry?

• A) $20
• B) Below $20
• C) Above $20
• D) None of the preceding answers is correct.

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Definitions:

England

A country that is part of the United Kingdom, known for its rich history, cultural heritage, and as a pioneer of the industrial revolution.

Radio

A technology that uses radio waves to carry information, such as sound, by systematically modulating properties of electromagnetic energy waves transmitted through space.

Comparative Advantage

The ability of an individual or economy to produce goods or services at a lower opportunity cost than others, which forms the basis for trade.

Radios

Radios are devices that receive and transmit signals using radio waves to enable wireless communication over distances.