Suppose that Microsoft and Netscape compete in the market for PC Internet browsers.Initially these firms compete as Cournot duopolies with symmetric reaction functions.If Microsoft enters into exclusive contracts with PC suppliers that preclude suppliers from loading Netscape's Internet browser on PCs loaded with the Windows operating system, then Netscape's marginal cost of distributing its browser would increase to $5 per unit. The new equilibrium would entail Microsoft supplying __________ browsers and Netscape supplying ____________ browsers to the market.The end result is ________ profits for Netscape.
A)more; fewer; lower.
B)fewer; more; higher.
C)more; more; lower.
D)fewer; fewer; higher.

Question

Quizplus · Accepted Answer

Microsoft would supply more browsers due to reduced competition, Netscape would supply fewer due to increased costs, and Netscape's profits would be lower due to decreased market share and increased costs.

Suppose That Microsoft and Netscape Compete in the Market for PC