#7 1. Which of one the followingstatements are correct about theKreps and Scheinkerman (1983)model?It is a 2-stage dynamic model inwhich the firms decide onA quantities in stage 1 and makepricing decisons with identicalconstant marginal cost in stage 2.It is a static model just like theCournot model.It is a static model of priceC competition but the products ofthe firms are differentiated.It is a 2-stage dynamic model inwhich the firms decide onD capacities in stage 1 and makepricing decisions with capacityconstants in stage 2.

Kreps and Scheinkman develop an extension of the Cournot and Bertrand duopoly models in which the…

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Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 9CQ

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Question

1. Which of one the following
statements are correct about the
Kreps and Scheinkerman (1983)
model?
It is a 2-stage dynamic model in
which the firms decide on
A quantities in stage 1 and make
pricing decisons with identical
constant marginal cost in stage 2.
It is a static model just like the
Cournot model.
It is a static model of price
C competition but the products of
the firms are differentiated.
It is a 2-stage dynamic model in
which the firms decide on
D capacities in stage 1 and make
pricing decisions with capacity
constants in stage 2.

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