In Problem 4, Suppose That the Market Demand Curve for Bean

question 29

Multiple Choice

In Problem 4, suppose that the market demand curve for bean sprouts is given by P = 1,680 - 2Q, where P is the price and Q is total industry output. Suppose that the industry has two firms, a Stackleberg leader and a follower. Each firm has a constant marginal cost of $80 per unit of output. In equilibrium, total output by the two firms will be

• A) 600.
• B) 400.
• C) 200.
• D) 800.
• E) 100.

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Definitions:

Markup

The dollar amount added to the product cost to determine its selling price.

Product Cost

The total expense incurred to produce and deliver a product to the market, including raw materials, labor, and overhead costs.

Selling Price

The amount of money for which a product or service is sold to the customer.

Netiquette

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