Suppose That the Duopolists Carl and Simon in Problem 1

question 1

Multiple Choice

Suppose that the duopolists Carl and Simon in Problem 1 face a demand function for pumpkins of Q = 1,800 - 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 $.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 R_C(Q_s) =

• A) 1,800 - 400Q_s.
• B) 1,800 - 800Q_s.
• C) 800 -.
• D) 400 -.
• E) 1,200 - Q_s.

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