1. According to the model of Bertrand price competition, competing firms will set prices according to...

1. According to the model of Bertrand price competition, competing firms will set prices according to which rule:

		marginal revenue equal marginal cost
		marginal revenue equal to average cost
		price equal to marginal revenue
		price equal to marginal cost
		price equal to average cost

There are 2 firms that sell a certain software, Microsoft and Oracle. Microsoft invented the software and so they act as a market leader by first deciding how much of the software they are going to produce each month. Oracle observes this decision by Microsoft and then chooses how much they are going to produce. The marginal cost of producing the software is constant at $2 for both companies. The total market demand for the software is P = 84 - 0.2Q. According to the Stackelberg model, Microsoft will produce________________ units of the software as the first-mover and Oracle will produce _______________ units in response.

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Rahul Sunny answered 1 year ago

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