Suppose Duopolists Face the Market Inverse Demand Curve P =

question 105

Multiple Choice

Suppose duopolists face the market inverse demand curve P = 100 - Q,Q = q₁ + q₂,and both firms have a constant marginal cost of 10 and no fixed costs.If firm 1 is a Stackelberg leader and firm 2's best response function is q₂ = (100 - q₁) /2,at the Nash-Stackelberg equilibrium firm 1's profit is

• A) 400.
• B) 650.
• C) 800.
• D) 1200.