The Duopolists Carl and Simon Face a Demand Function for Pumpkins

question 55

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

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Definitions:

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