Examlex

Solved

Scenario: Two Firms, Firm 1 and Firm 2, Make Differentiated

question 264

Multiple Choice

Scenario: Two firms, Firm 1 and Firm 2, make differentiated products and compete in a duopoly market. The firms do not have a fixed cost. Firm 1's cost is $30 per unit, while Firm 2's cost is $25 per unit. (So they are the marginal cost and the average total cost) . There are 1,000 consumers in this market. The demand is divided between the two firm in the following way:
• If Firm 1's price is less than twice Firm 2's price, then everyone buys from Firm 1.
• If Firm 1's price is more than twice Firm 2's price, then everyone buys from Firm 2.
• If Firm 1's price is equal to twice Firm 2's price, then half of the consumers buy from Firm 1 and the other half buy from Firm 2.
-Refer to the scenario above.Suppose Firm 2 sets the price at $25.If Firm 1 sets its price above $50,then its profit is ________.If Firm 1 sets its price above $30 and below $50,then its profit is ________.If Firm 1 sets its price below $30,then its profit is ________.


Definitions:

Job Enrichment

The process of enhancing a job by adding tasks that increase responsibility, autonomy, and opportunities to grow.

Relational Architecture

The design and structure of relationships within organizations, including hierarchies and networks, that influence how information flows and how people interact.

Connect With People

The process of establishing meaningful relationships with others through communication, empathy, and interpersonal skills.

More Responsibility

Refers to the additional duties or tasks assigned to an individual, often indicating trust and confidence in their capabilities.

Related Questions