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Game Theory "In a market with two producers, the equilibrium profits for the two duopolists do...

Game Theory

"In a market with two producers, the equilibrium profits for the two duopolists do not depend on whether the duopolists set prices or quantities."

True or false? Explain your answer.

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Answer #1

Answer : The answer is False.

By setting price and quantity level the producer get revenue. If this revenue is higher than the cost then the producer earn profit. But if this revenue is lower than the cost then the producer face loss. So, the profit depends on price and quantity level setting. Therefore, the given statement is false.

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