The Duopolists Carl and Simon Face a Demand Function for Pumpkins

question 49

Multiple Choice

The duopolists Carl and Simon face a demand function for pumpkins of Q = 8,200 - 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 $.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)= 4,000 - Qs/2.
• B)R_C(Q_s)= 8,200 - 400Q_s.
• C)R_C(Q_s)= 8,200 - 800Q_s.
• D)R_C(Q_s)= 2,000 - Qs/2.
• E)R_C(Q_s)= 6,000 - Q_s.

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Definitions:

Sales Units

The quantity or number of products sold or services rendered by a business during a specific period.

Product Warranty Payable

A liability account that records the estimated amounts a company expects to pay for warranties on products it has sold.

Product Warranty Expense

Costs associated with the repair or replacement of faulty products that have been sold, under the terms of a product warranty.

Estimated Product

A provisional evaluation or calculation of a product's potential production costs, sales value, or impact on the market.