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4. The inverse demand for a homogeneous-product Stackelberg duopoly is P = 20,000 - 5Q. The cost structures for the leader and the follower, respectively, are CL (QL) =3,000QL and CF (QF) =4,000QF.

a. What is the follower's reaction function?
b. Determine the equilibrium output level for both the leader and the follower.
c. Determine the equilibrium market price.
d. Determine the profits of the leader and the follower.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019
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Related questions

Now, suppose the inverse market demand function for a two-firm Stackelberg model is given by P=49-Q where Q=q1+q2 is the total output produced in the market, P is the market price, q1 is the quantity of output produced by firm 1, q2 is the quantity of output produced by firm 2. Firm 1 is the leader and firm 2 is the follower. The marginal costs of the two firms are MC1=2 and MC2=3.

1. What is the follower’s reaction function?

2. Determine the equilibrium output level for both the leader and the follower.

3. Determine the equilibrium market price.

4. Determine the profits of the leader and the follower assuming there are no fixed costs.

Now, suppose the inverse market demand function for a two-firm Stackelberg model is given by P=49-Q where Q=q1+q2 is the total output produced in the market, P is the market price, q1 is the quantity of output produced by firm 1, q2 is the quantity of output produced by firm 2. The firm is the leader and firm 2 is a follower. The marginal costs of the two firms are MC1=2 and MC2=3.

1. What is the follower’s reaction function?

2. Determine the equilibrium output level for both the leader and the follower.

3. Determine the equilibrium market price.

4. Determine the profits of the leader and the follower assuming there are no fixed costs.

1. Suppose the inverse demand function for two firms in a homogeneous-product, Stackelberg oligopoly is given by P = 100 -3 (Q1 + Q2) and their costs are zero. Firm 1 is the leader, and firm 2 is the follower. What is firm 1s output

2. Suppose the inverse demand function for two firms in a homogeneous-product, Stackelberg oligopoly is given by P = 170 -3 (Q1 + Q2) and their costs are zero. Firm 1 is the leader, and firm 2 is the follower. What is firm 2s output

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