Suppose That the Duopolists Carl and Simon Face a Demand

question 16

Multiple Choice

Suppose that the duopolists Carl and Simon face a demand function for pumpkins of Q = 16,400 - 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 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)8,000 - Q_s/2.
• B)16,400 - 400Q_s.
• C)16,400 - 800Q_s.
• D)4,000 - Q_s/2.
• E)12,000 - Q_s.