d. Find U-To’s first order condition for profit-maximization.  e. Find the profit-maximizing price and quantity chosen by U-To, and the quantity supplied by the follower firms.

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 2. U-To is a price leader in the market for truck rentals. There are many small follower firms that take U-To’s price P as given and then supply truck rentals according to the supply function S(P)=P-50 for P≥50, and S(P)=0 for P<50. The demand for truck rentals is given by QD(P)=100-P. U-To’s cost function is C(QL)=100+40QL. 

 

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d. Find U-To’s first order condition for profit-maximization. 

e. Find the profit-maximizing price and quantity chosen by U-To, and the quantity supplied by the follower firms. 

 

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