Which of the Following Will Happen If a Firm in a Duopoly

question 206

Multiple Choice

Which of the following will happen if a firm in a duopoly with homogeneous products increases its price above its marginal cost once a Nash equilibrium is reached?

• A) The firm will earn huge economic profits.
• B) The firm will gain market share.
• C) The firm will lose all its customers to its rival.
• D) The firm will continue to earn zero economic profits.

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Definitions:

Intended Beneficiary

A person or group for whom a benefit is intended, especially in the context of a contract or agreement.

Delegatee

A person or entity to whom duties, powers, or responsibilities have been transferred by a delegator.

Anti-Assignment Clause

A provision in a contract that prohibits the transfer of rights or delegation of duties to another party without prior consent.

Donee Beneficiary

A third party who benefits from a contract in which one party promises to give a gift or perform a service for another.