The inverse demand for a homogeneous-product Stackelberg duopoly is P= 12,000-5Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 3,000 QL and CF(QA) 6,000QF a. What is the follower's reaction function? QF= QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: Follower output: c. Determine the equilibrium market price. $ d. Determine the profits of the leader and the follower. Leader profits: $ Follower profits: $

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section9.6: The Role Of Risk Aversion
Problem 27P
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The inverse demand for a homogeneous-product Stackelberg duopoly is P= 12,000-5Q. The cost structures for the leader and the
follower, respectively, are CL(QL) = 3,000 QL and CF(QA) 6,000QF
a. What is the follower's reaction function?
QF=
QL
b. Determine the equilibrium output level for both the leader and the follower.
Leader output:
Follower output:
c. Determine the equilibrium market price.
$
d. Determine the profits of the leader and the follower.
Leader profits: $
Follower profits: $
Transcribed Image Text:The inverse demand for a homogeneous-product Stackelberg duopoly is P= 12,000-5Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 3,000 QL and CF(QA) 6,000QF a. What is the follower's reaction function? QF= QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: Follower output: c. Determine the equilibrium market price. $ d. Determine the profits of the leader and the follower. Leader profits: $ Follower profits: $
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