The inverse demand for a homogeneous product Stackelberg duopoly is P = 14000 – 20. The cost functions for the leader and follower are C(Q.) = 2000Q, and Cf(QF) = 4000QF, respectively. a) What is the follower's revenue function? Note that MRF = 14,000-2Qi-4QF and MCF = 4,000. b) What is the follower's reaction curve? c) Determine the equilibrium output level for both the leader and the follower. [Note that for a quadratic revenue function R(Q)=aQ²+bQ+c, it holds that MR(Q)=2aQ+b.]

The inverse demand for a homogeneous product Stackelberg duopoly is P = 14000 – 20. The cost functions for the leader and follower are C(Q.) = 2000Q, and Cf(QF) = 4000QF, respectively. a) What is the follower's revenue function? Note that MRF = 14,000-2Qi-4QF and MCF = 4,000. b) What is the follower's reaction curve? c) Determine the equilibrium output level for both the leader and the follower. [Note that for a quadratic revenue function R(Q)=aQ²+bQ+c, it holds that MR(Q)=2aQ+b.]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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