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The inverse demand for a homogeneous-product Stackelberg duopoly is P= 10,000 -4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 3,000QL and CF (QF) = 4,000 QF a. What is the follower's reaction function? QF= 750 0.1 QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: 875 Follower output: 641 c. Determine the equilibrium market price. $ 4,999 d. Determine the profits of the leader and the follower. Leader profits: $1,619,531 Follower profits: $ 999,506 ✪

The inverse demand for a homogeneous-product Stackelberg duopoly is P= 10,000 -4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 3,000QL and CF (QF) = 4,000 QF a. What is the follower's reaction function? QF= 750 0.1 QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: 875 Follower output: 641 c. Determine the equilibrium market price. $ 4,999 d. Determine the profits of the leader and the follower. Leader profits: $1,619,531 Follower profits: $ 999,506 ✪

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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The inverse demand for a homogeneous-product Stackelberg duopoly is P= 10,000 -4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 3,000QL and CF (QF) = 4,000 QF a. What is the follower's reaction function? QF= 750 0.1 QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: 875 Follower output: 641 c. Determine the equilibrium market price. $ 4,999 d. Determine the profits of the leader and the follower. Leader profits: $1,619,531 Follower profits: $ 999,506 ✪
Transcribed Image Text:The inverse demand for a homogeneous-product Stackelberg duopoly is P= 10,000 -4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 3,000QL and CF (QF) = 4,000 QF a. What is the follower's reaction function? QF= 750 0.1 QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: 875 Follower output: 641 c. Determine the equilibrium market price. $ 4,999 d. Determine the profits of the leader and the follower. Leader profits: $1,619,531 Follower profits: $ 999,506 ✪
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