Suppose the Demand for Pizza in a Small Isolated Town

question 90

Essay

Suppose the demand for pizza in a small isolated town is p = 10 - Q.The only two firms,A and B,behave as Cournot duopolists.Each has a cost function TC = 2 + Q.If the government wants to subsidize firm A to raise its output to that of a Stackelberg leader,how large should the subsidy be?

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Definitions:

Dependent Variable

The variable in an experiment or study that is affected or influenced by changes in another variable, often measured or tested.

Independent Variables

Factors in an experiment that are purposely changed or manipulated to observe their effect on dependent variables.

Deviations

Variance from a reference value, typically the average, shown by the deviation in observed figures.

Actual Data Points

The real, observed values or measurements recorded during an experiment or study.