Consider an industry composed of only two firms, each producing an identical product. The two firms have identical constant marginal costs of production, zero fixed costs, and behave as leader- follower (Stackelberg duopolists). Which of the following conditions will hold in equilibrium? a) at least one firm makes zero profit [Choose ] b) both firms make decisions at the same time [Choose] c) the firm that moves first will make lower profit than the other firm [Choose ] d) one of the firms chooses its price first [Choose] [Choose ] e) the combined profit of Stackelberg duopolists is higher than that of Bertrand duopolists [Choose] f) the equilibrium price is greater than the equilibrium price under perfect competition but less than the equilibrium price in a Cournot model of duopoly

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.