A Duopoly Faces the Demand Curve D(p) = 30 -

question 54

Multiple Choice

A duopoly faces the demand curve D(p) = 30 - .5p. Both firms in the industry have a total cost function given by C(q) = 4q. Suppose that firm 1 is a Stackelberg leader in choosing its quantity first. Firm 1's profit function can be written as

• A) q₁ = 14 - .5q₂.
• B) q₂ = 14 - .5q₁.
• C) 28_q1 - q²₁.
• D) 56_q1 - q²₁.
• E) 60_q - q².

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