Consider a Stackelberg Duopoly with the Following Inverse Demand Function

question 1

Multiple Choice

Consider a Stackelberg duopoly with the following inverse demand function: P = 100 − 2Q₁ − 2Q₂.The firms' marginal costs are identical and are given by MC_i = 2.Based on this information,the Stackelberg leader's marginal revenue function is:

• A) MR(Q_L) = 50 − 2Q_L + c₁/2.
• B) MR(Q_L) = 50 − 2Q_L + c₂/2.
• C) MR(Q_F) = 100 − 2Q_F + c₁/2.
• D) MR(Q_F) = 100 − Q_F + c₂/2.

---

Definitions:

Variable Costing

An accounting method where only variable production costs are charged to product units, excluding fixed overhead costs.

Absorption Costing

An accounting method that includes all direct and indirect manufacturing costs in the cost of a product.

Operating Income

A measure of a company's profitability, excluding non-operating expenses such as interest and taxes, and non-operating income.

Finished Goods Inventory

This is the account that contains the cost of finished goods that are ready to be sold but are still in stock.