Stackelberg Duopolists, Firm 1 and Firm 2, Face Inverse Market $P = 50 - Q$

question 25

Multiple Choice

Stackelberg duopolists, Firm 1 and Firm 2, face inverse market demand $P = 50 - Q$ . Both have marginal cost, $M C = \$ 20$ . If the follower takes the leader's output as fixed at Q₁, what is the equation of its reaction function?

• A) \(30 - Q _ { 1 } = Q _ { 2 }\)
• B) \(15 - Q _ { 1 } = Q _ { 2 }\)
• C) \(15 - 2 Q _ { 1 } = Q _ { 2 }\)
• D) \(15 - Q _ { 1 } / 2 = Q _ { 2 }\)

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Definitions:

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The quality or condition of having a specific direction, orientation, or tendency.

Activation

Involves the arousal of the brain or body to a state of increased responsiveness to stimuli.

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Physical strength, health, and energy.

Nomothetic

An approach in psychology that seeks to study and identify general laws and principles that can be applied broadly across individuals.