On a small island two farmers, Inger and Johannes, are the only suppliers of freshly dug potatoes for the island's residents, restaurants and tourists. The demand for freshly dug potatoes during the season is given by Q = 1,200 – 30P, where Q is the total quantity sold (measured in kilograms per day) and P is the price (measured i DKK per kilogram). - The two farmers produce potatoes in the same way, but their fields are located in different parts of the island, and therefore Inger plants her seed potatoes some days before Johannes. Thus, Johannes can see how many potatoes Inger is going to produce per day during the season before he decides how much he is going to produce. Inger's daily costs are given by C;(qi) = 10qi, where q; is Inger's daily production, and C; are her daily costs. Johannes's costs are similarly given by C;(qj) = 10qj. a) Suppose that Inger has planted potatoes corresponding to a daily production of 300 kilograms. How much will Johannes produce per day if he is to maximize his profit? b) Find the (Stackelberg) equilibrium in the market.

On a small island two farmers, Inger and Johannes, are the only suppliers of freshly dug potatoes for the island's residents, restaurants and tourists. The demand for freshly dug potatoes during the season is given by Q = 1,200 – 30P, where Q is the total quantity sold (measured in kilograms per day) and P is the price (measured i DKK per kilogram). - The two farmers produce potatoes in the same way, but their fields are located in different parts of the island, and therefore Inger plants her seed potatoes some days before Johannes. Thus, Johannes can see how many potatoes Inger is going to produce per day during the season before he decides how much he is going to produce. Inger's daily costs are given by C;(qi) = 10qi, where q; is Inger's daily production, and C; are her daily costs. Johannes's costs are similarly given by C;(qj) = 10qj. a) Suppose that Inger has planted potatoes corresponding to a daily production of 300 kilograms. How much will Johannes produce per day if he is to maximize his profit? b) Find the (Stackelberg) equilibrium in the market.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter5: Supply, Demand, And Price: Applications

Section: Chapter Questions

Problem 8QP

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