Two Firms Compete as a Stackelberg Duopoly

question 107

Multiple Choice

Two firms compete as a Stackelberg duopoly.The demand they face is P = 40 − Q.The cost function for each firm is C(Q) = 4Q.The profits of the two firms are:

• A)  _L = $162;  _F = $81.
• B)  _L = $81;  _F = $40.5.
• C)  _L = $81;  _F = −$40.5.
• D)  _L = $162;  _F = $40.5.

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