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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