There Are Two Major Producers of Corncob Pipes in the World

question 17

Multiple Choice

There are two major producers of corncob pipes in the world, both located in Herman, Missouri.Suppose that the inverse demand function for corncob pipes is described by p = 160 - 3q, where q is total industry output, and marginal costs are zero.What is the Cournot reaction function of firm 1 to the output, q₂, of firm 2?

• A)160 - 3q²₂
• B)160 - 3q₂
• C)26.67 - .5q₂
• D)53.33 - 3q₂
• E)163 - 6q₂

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Definitions:

Cost of Goods Sold

Represents the direct costs attributable to the production of goods sold by a company, including materials and labor.

Return on Equity

A measure of a corporation’s profitability that reveals how much profit a company generates with the money shareholders have invested.

Price-Earnings Ratio

A metric assessing the relationship between a company's stock price and its earnings on a per-share basis, useful in judging whether a stock is undervalued or overvalued.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, representing the portion of sales that turns into profits.