With linear demand and constant marginal cost,a Stackelberg leader's profits are ___________ the follower.
A) less than
B) equal to
C) greater than
D) either less than or greater than

Question

Quizplus · Accepted Answer

With linear demand and constant marginal cost, the Stackelberg leader will choose a higher quantity to produce than the follower, allowing them to set a higher price and earn greater profits. Therefore, the leader's profits will be greater than the follower.

With Linear Demand and Constant Marginal Cost,a Stackelberg Leader's Profits