Question: Suppose two firms are competing by setting prices simultaneously and they are producing differentiated products. If the marginal cost of producing for firm 1 increases,

Suppose two firms are competing by setting prices simultaneously and they are producing differentiated products. If the marginal cost of producing for firm 1 increases, then at the new equilibrium:

Group of answer choices

Firm 1 will charge a higher price and firm 2 will charge a higher price

Firm 1 will charge a higher price and firm 2 will charge a lower price

Firm 1 will charge a lower price and firm 2 will charge a higher price

Firm 1 will charge a lower price and firm 2 will charge a lower price

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