In the Stackelberg model of oligopoly:
A)each firm takes the other firm's output as constant in deciding its own output level.
B)the leader firm's output is determined at the point where demand equals price.
C)the leader firm selects its output first,taking the reactions of follower firms into account.
D)each firm decides its output based on the interaction of demand and supply.

Question

Quizplus · Accepted Answer

In the Stackelberg model, one firm (the leader) selects its output level first, taking the reactions of the other firms (the followers) into account. The followers then choose their output levels based on the leader's decision, giving the leader an advantage in the market. Therefore, choice C is the correct answer.

In the Stackelberg Model of Oligopoly