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:

Social Security System

A government program that provides financial assistance to retirees, disabled workers, and survivors of deceased workers.

Tax Bracket

A range of incomes taxed at a given rate.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, showing the share of income that goes to taxes.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of an additional dollar of earnings that will be paid in tax.