The Duopolists Carl and Simon Face a Demand Function for Pumpkins

question 30

Multiple Choice

The duopolists Carl and Simon face a demand function for pumpkins of Q = 2,200 - 400P, where Q is the total number of pumpkins that reach the market and P is the price of pumpkins. Suppose further that each farmer has a constant marginal cost of $1.50 for each pumpkin produced. If Carl believes that Simon is going to produce Q_s pumpkins this year, then the reaction function tells us how many pumpkins Carl should produce in order to maximize his profits. Carl's reaction function is

• A) R_C(Q_s) = 400 -.
• B) R_C(Q_s) = 2,200 - 800Q_s.
• C) R_C(Q_s) = 800 -.
• D) R_C(Q_s) = 2,200 - 400Q_s.
• E) R_C(Q_s) = 1,200 - Q_s.

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