A Stackelberg Leader and Follower Choose Their Outputs to Maximize

question 8

Multiple Choice

A Stackelberg leader and follower choose their outputs to maximize their own profits.Local property taxes which constitute a lump sum tax for each of them are reduced by $500 per year for the leader and by $200 a year for the follower.In consequence, the firms

• A)both increase their output, with the leader increasing its output by more.
• B)both increase their output, with the follower increasing its output by more.
• C)increase their output by equal amounts for each firm.
• D)leave their outputs unchanged.
• E)There is not enough information in the question to determine what the firms will do.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how spread out the values are from the mean.

Bottling Machine

Equipment used for filling bottles with liquid products, such as water, soda, or beer, and sealing them for distribution.

Normal Model

A type of statistical distribution, also known as the Gaussian distribution, characterized by a symmetric bell-shaped curve.

Membership Charges

Fees incurred for being part of an organization, club, or service, granting the member access to certain benefits, resources, or facilities.