An Industry Has Two Firms-A Stackelberg Leader and a Follower

question 46

Multiple Choice

An industry has two firms-a Stackelberg leader and a follower.The price of the industry output is given by P = 36 - Q, where Q is the total output of the two firms.The follower has a marginal cost of $0.The leader has a marginal cost of $9.How much should the leader produce in order to maximize profits?

• A)12
• B)18
• C)9
• D)7
• E)None of the above.

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Definitions:

Competitive Implications

The potential impacts or consequences that actions of one business can have on its competitors in the market.

Trade Restrictions And Quotas

Measures implemented by governments to control the amount and type of goods that can be imported or exported, affecting international trade.

Political Risk

The risk of losses due to changes in a country's political landscape or government policies that can affect investments or operations.

Licensing Agreement

A legal contract allowing one party to use another party's property or intellectual property under specified conditions.