ference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 2000 – Q where Q is the industry’s output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) = 200Q. The firm’s marginal cost of production (MC) is equal to the firm’s average cost (AC): MC = AC = 200. Now suppose the two firms engage in Stackelberg market competition. Assume firm 1 is the leader (first-mover) and firm 2 is the follower firm (second-mover). Marginal profit function of Stackelberg leader: 900−Q1 QUESTION 14: What will be the market price in this Stackelberg
Economics
Reference the following information about the
The market demand function is given the following equation: P = 2000 – Q where Q is the industry’s output level.
Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) = 200Q. The firm’s marginal cost of production (MC) is equal to the firm’s average cost (AC):
MC = AC = 200.
Now suppose the two firms engage in Stackelberg market competition. Assume firm 1 is the leader (first-mover) and firm 2 is the follower firm (second-mover).
Marginal profit function of Stackelberg leader: 900−Q1
QUESTION 14:
What will be the market price in this Stackelberg model?
Group of answer choices
$480
$650
$720
$900
QUESTION 15:
Can you calculate the profit earned by the Stackelberg leader and the Stackelberg follower?
Group of answer choices
$200,000, $450,000
$450,000, $300,000
$405,000, $202,500
$202,500, $405,000
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