Given the following information about demand and costs from the problem: Inverse demand 16,000 intercept Inverse demand slope -4 Leader cost slope 4,000 Follower cost slope 6,000 Required: 1. Determine the equilibrium output level for the leader. 2. Determine the equilibrium output level for the follower. 3. Determine the equilibrium market price. 4. Determine the profits of the leader. 5. Determine the profits of the follower.

Given the following information about demand and costs from the problem: Inverse demand 16,000 intercept Inverse demand slope -4 Leader cost slope 4,000 Follower cost slope 6,000 Required: 1. Determine the equilibrium output level for the leader. 2. Determine the equilibrium output level for the follower. 3. Determine the equilibrium market price. 4. Determine the profits of the leader. 5. Determine the profits of the follower.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Pls help

Given the following information about demand and costs from the problem:
Inverse demand
16,000
intercept
Inverse demand slope
Leader cost slope
Follower cost slope
-4
4,000
6,000
Required:
1. Determine the equilibrium output level for the leader.
2. Determine the equilibrium output level for the follower.
3. Determine the equilibrium market price.
4. Determine the profits of the leader.
5. Determine the profits of the follower.

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Step 1: State the information given

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Step 2: 1. Determine the equilibrium output level for the leader

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Step 3: 2. Calculate the profit maximizing output for follower firm

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Step 4: 3. Determine equilibrium market price

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Step 5: 4. Calculate the profit of a leader

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Step 6: 5. Calculate the profit for the followers

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