Consider Two Firms Competing to Sell a Homogeneous Product by Setting

Multiple Choice

Consider two firms competing to sell a homogeneous product by setting price.The inverse demand curve is given by P = 15 − Q.Firm 1 has MC₁(Q₁) = 1 and firm 2 has MC₂(Q₂) = 1.05.Based on this information,we can conclude that the market price will be:

A) $1 and each firm will produce 7 units.
B) $1.05 and each firm will produce 6.975 units.
C) $1.04 and firm 1 will produce 13.96 units and firm 2 will produce 0 units.
D) $1 and firm 1 will produce 14 units and firm 2 will produce 0 units.