Suppose two firms face market demand of P=150-Q, where . Both firms have the same unit cost of C, which consist of your student number a plus 20 (i.e. if your student number a=3, then cost C=20+3=23). Assume the firms compete a la Stackelberg. Firm 1 is the leader and Firm 2 is the follower in this market. 1.What is the follower’s total revenue 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.
Suppose two firms face market demand of P=150-Q, where . Both firms have the same unit cost of C, which consist of your student number a plus 20 (i.e. if your student number a=3, then cost C=20+3=23). Assume the firms compete a la Stackelberg. Firm 1 is the leader and Firm 2 is the follower in this market. 1.What is the follower’s total revenue 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.
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.4P
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Suppose two firms face market demand of P=150-Q, where . Both firms have the same unit cost of C, which consist of your student number a plus 20 (i.e. if your student number a=3, then cost C=20+3=23). Assume the firms compete a la Stackelberg. Firm 1 is the leader and Firm 2 is the follower in this market.
1.What is the follower’s total revenue function?
2.Determine the equilibrium output level for both the leader and the follower.
3.Determine the
4.Determine the profits of the leader and the follower.
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