Question

Two firms compete in a Cournot fashion. Firm 1 successfully engages in an activity that raises its rival’s marginal cost of production.

a. Which of the following are activities that might raise rivals’ marginal costs.

Instruction: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit.

• Tactics that increase the price of inputs.unanswered
• Tactics that raise rental rates for production facilities.unanswered
• Tactics that raise distribution costs

b. In order for such strategies to be beneficial, is it necessary for the manager of firm 1 to enjoy hurting the rival?

• No

• Yes

Answer 1

Tactics that increase the price of inputs , Tactics that raise distribution costs might raise rivals marginal costs.

In order for such strategies to be beneficial , No it is not necessary for the manager of firm 1 to enjoy hurting the rival.