The inverse demand function for fuzzy dice is p = 20 - q.There are constant returns to scale in this industry with unit costs of $8.Which of the following sets of statements is completely true?
A)Monopoly output is 6.Cournot duopoly total output is 8.A Stackelberg leader's output is 8.
B)Monopoly output is 8.Cournot duopoly total output is 8.A Stackelberg leader's output is 8.
C)Monopoly output is 6.Cournot duopoly total output is 6.A Stackelberg follower's output is 3.
D)Monopoly output is 6.Cournot duopoly total output is 8.A Stackelberg follower's output is 3.
E)Monopoly output is 6.Cournot duopoly total output is 8.A Stackelberg follower's output is 4.

Question

Quizplus · Accepted Answer

The inverse demand function suggests that as quantity increases, price decreases. In a monopoly, the firm will produce where marginal revenue equals marginal cost, which is typically less than the competitive output. In a Cournot duopoly, firms choose quantities simultaneously, leading to a total output higher than monopoly but less than perfect competition. A Stackelberg leader produces more than in Cournot, anticipating the follower's response, which leads to a higher total output. However, the follower produces less than in the Cournot case. Given the unit cost of $8, the correct outputs align with the dynamics of each market structure described, making option D the correct set of statements.

The Inverse Demand Function for Fuzzy Dice Is P =