QUESTION 4 A shows how much a firm will produce as a function of how much it thi

Question

QUESTION 4 A shows how much a firm will produce as a function of how much it thinks its competitors will produce contract curve O demand curve O reaction curve O Nash equilibrium curve QUESTION 5 In the Bertrand model with homogeneous produ cts the firm that sets the lower price will capture all of the market. O the Nash equilibrium is the competitive outcome. O both firms set price equal to marginal cost. all of the above. QUESTION 6 As the number of firms increases in a market, the differences between the Cournot, Stackelberg, and price-taking market structures O decreases. increases remains the same. O cannot be determined.

Explanation / Answer

(Question 4) Option (3)

In Oligopolistic models, reaction curve (best response function) shows how much a firm will produce as a function of how much its competitors will produce.

(Question 5) Option (4)

Bertrand model is a form of price competition where, if firms price equal to their MC, a Nash equilibrium will be obtained.

(Question 6) Option (1)

The higher the number of firms, the more the market moves toward a competitive structure and the less the differences.

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