How Does the Stackelberg Model of Oligopoly Differ from the Dominant

question 46

Multiple Choice

How does the Stackelberg model of oligopoly differ from the dominant firm model?

• A)The Stackelberg model assumes a single leader firm unlike the dominant firm model where all firms share output equally.
• B)In the dominant firm model,the fringe firms are competitive while in the Stackelberg model,the follower firms display Cournot behavior.
• C)The dominant firm model is only applicable to a duopoly while the Stackelberg model can be applied to all oligopolistic markets.
• D)The Stackelberg leader produces along the market demand curve while the dominant firm produces along the residual demand curve.

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Definitions:

Fixed Expense

Charges that stay unchanged with shifts in the amount of products made or the number of sales.

Unit Sales

The measure of the quantity of units of a product sold by a company, often used as an indicator of demand and financial health.

Monthly Target Profit

The profit goal set by a business to achieve within a one-month period.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales, illustrating how revenue growth translates into growth in operating income.