The Inverse Demand Curve for a Stackelberg Duopoly Is P

question 44

Essay

The inverse demand curve for a Stackelberg duopoly is P = 10,000 - 6Q.The leader's cost structure is C_L(Q_L)= 15Q_L.The follower's cost structure is C_F(Q_F)= 25Q_F.
a.Determine the reaction function for the follower.
b.Determine the equilibrium output levels for both the leader and the follower.
c.What are the profits for the leader?
For the follower?

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Definitions:

Period Of Time

A specific duration or length of time during which an event occurs or a condition exists.

Expenses

Costs incurred in the operations of a business that are necessary for earning revenue.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, often referred to as the net assets or shareholders' equity.

Assets

are resources owned by a business, having economic value and expected to provide future benefits.