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:

Resource Commitments

The allocation or dedication of organizational resources, such as time, money, and personnel, towards a specific project or objective.

Social Responsibility

The duty of individuals, organizations, and businesses to act in the best interest of society at large, often encompassing ethical, environmental, and philanthropic considerations.

Public Opinion Survey

A research method used to collect information on the public's views and attitudes towards various topics or issues.

Ethical Responsibility

The duty to act in a morally correct manner, considering the impact of one’s actions on others and adhering to principles of fairness and justice.