Exercise 1: Stackelberg model Suppose there are two firms, Firm 1 and Firm 2. Both firms have the same production cost and they face the industry demand given below.  Demand: P = 500 - Q Costs: MC = ATC = 200 Suppose Firm 1 is the incumbent and the first-mover. Its profit is equal to ________________.   a.$14,000 b.$12,000 c.$11,250 d.$22,500   Continue with Exercise 1...   If Firm 2 enters, its profit is equal to _________.    a.$5,625 b.$6,000 c.$7,000 d.$11,250

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