Stackelberg Duopolists, Firm 1 and Firm 2, Face Inverse Market $P = 50 - Q$

question 64

Multiple Choice

Stackelberg duopolists, Firm 1 and Firm 2, face inverse market demand $P = 50 - Q$ . Both have marginal cost, $M C = \$ 20$ . Firm 1 produces output $Q _ { 1 } = 15$ and Firm 2 produces output $Q _ { 2 } = 7.5$ . What is the price level in this market and what is the level of industry profits (i.e., the sum of Firm 1 and Firm 2's profits) ?

• A) \(P = 27.5\); industry profits \(= 168.75\)
• B) \(P = 30\); industry profits \(= 172.6\)
• C) \(P = 32.5\); industry profits \(= 180\)
• D) \(P = 34\); industry profits \(= 184.2\)

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