Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.The marginal cost for firm 1 (The Leader) is given by mc1 = 12 Q.The marginal cost for firm 2 (The Follower) is given by mc2 = 9 Q. (Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .) What are the profits of firm 2? Answer: 41.92
Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.The marginal cost for firm 1 (The Leader) is given by mc1 = 12 Q.The marginal cost for firm 2 (The Follower) is given by mc2 = 9 Q. (Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .) What are the profits of firm 2? Answer: 41.92
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter13: best-practice Tactics: Game Theory
Section: Chapter Questions
Problem 1E
Question
Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 12 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 9 Q.
(Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .)
What are the profits of firm 2? Answer: 41.92
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