The inverse demand for a homogeneous-product Stackelberg duopoly is P = 16,000 - 4Q. The cost structures for the leader and the
follower, respectively, are CL(QL) = 4,000QL and CF (QF) = 6,000QF..
a. What is the followers reaction function?
QF =
b. Determine the equilibrium output level for both the leader and the follower.
Leader output:
Follower output:
c. Determine the equilibrium market price.
$
d. Determine the profits of the leader and the follower.
Leader profits: $
Follower profits: $
a. What is the followers reaction function?
QF =
b. Determine the equilibrium output level for both the leader and the follower.
Leader output:
Follower output:
c. Determine the equilibrium market price.
$
d. Determine the profits of the leader and the follower.
Leader profits: $
Follower profits: $
1 answer:
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Answer:
The correct options are as follows
Buyers will pay all of the tax.
The price of Humbugs will rise to $60.
The quantity of Humbugs demanded will not change.
Explanation:
As the question is not complete, the complete question is found online and is attached herewith.
The options given are as follows
Sellers will pay all of the tax.
Buyers will pay all of the tax.
The price of Humbugs will rise to $60.
The price of Humbugs will rise by less than $10.
The quantity of Humbugs demanded will not change.
Now option 1 is not correct as the buyer has to pay the tax not the seller.
option 2 is correct
option 3 is correct
option 4 is not correct as the initial price is $50 and the new price is to be more than $60 thus the rise is more than $10.
option 5 is correct as the demand of the hamburger will remain the same.
