Consider a Market Consisting of Two Firms Where the Inverse

question 50

Multiple Choice

Consider a market consisting of two firms where the inverse demand curve is given by P = 500 - 2Q₁ - 2Q₂. Each firm has a marginal cost of $50. Based on this information, we can conclude that aggregate profits in the different equilibrium oligopoly models will follow which of the following orderings?

• A) π^Bertand > π^Collusion > π^Stackelberg > π^Cournot
• B) π^Collusion > π^Cournot > π^Stackelberg > π^Bertand
• C) π^Collusion > π^Stackelberg > π^Cournot > π^Bertand
• D) None of the answers is correct.

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Definitions:

Accept Project

The decision-making process to proceed with a particular project based on its projected profitability or strategic value.

Discounted Payback Period

The time it takes for an investment to break even in terms of present value.

Positive NPV

A situation where the net present value of a project or investment is greater than zero, indicating that the project is expected to generate value over its cost.

Project Life

The duration from the initiation to the closure of a project, encompassing all its phases and activities.