An Increase in Firm 2's Marginal Cost Will Cause

question 93

Multiple Choice

An increase in firm 2's marginal cost will cause:

• A) a downward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity.
• B) an upward shift in firm 1's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity.
• C) a downward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a higher quantity and firm 2 is producing a lower quantity.
• D) an upward shift in firm 2's reaction function, resulting in a new Cournot equilibrium where firm 1 is producing a lower quantity and firm 2 is producing a higher quantity.

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Definitions:

Merger

The combination of two or more companies into a single entity, with the goal of achieving synergies and improved competitive position.

Integration

The process of combining or coordinating separate elements or systems into a unified whole.

Organization Cultures

The shared values, beliefs, norms, and practices that shape the behavior and actions of individuals within an organization.

Success Rates

A measure of the frequency or likelihood with which desired outcomes are achieved within a specific context, often used in evaluating performance or effectiveness.