There are two firms in the blastopheme industry. The inverse demand curvein a typical week for price P for blastophemes is given by P = 4,200 - 3Q.Total quantity is Q = 91 + q2. Each firm has one manufacturing plant.Suppose Firm 1 entered first and has lower fixed cost than Firm 2. The costfunctions are, for Firm 1, C(q₁) = 50,000+ 600q1, and, for Firm 2,C(92)=70,000+ 600q2. Marginal cost for each firm is $600 per unit. If Firm1 is the Stackelberg leader and Firm 2 is the follower, find the equilibriumprice, level of consumer surplus, and, for each firm, the quantity producedand the resulting weekly profit.

Stackelberg competition describes the oligopoly model based on the non-cooperative strategic game.…

There are two firms in the blastopheme industry. The inverse demand curve in a typical week for price P for blastophemes is given by P = 4,200 - 30. Total quantity is Q=q1+ q2. Each firm has one manufacturing plant. Suppose Firm 1 entered first and has lower fixed cost than Firm 2. The cost functions are, for Firm 1, C(q) = 50,000+ 600q1, and, for Firm 2, C(92)=70,000+ 600q2. Marginal cost for each firm is $600 per unit. If Firm 1 is the Stackelberg leader and Firm 2 is the follower, find the equilibrium price, level of consumer surplus, and, for each firm, the quantity produced and the resulting weekly profit.

There are two firms in the blastopheme industry. The inverse demand curve in a typical week for price P for blastophemes is given by P = 4,200 - 30. Total quantity is Q=q1+ q2. Each firm has one manufacturing plant. Suppose Firm 1 entered first and has lower fixed cost than Firm 2. The cost functions are, for Firm 1, C(q) = 50,000+ 600q1, and, for Firm 2, C(92)=70,000+ 600q2. Marginal cost for each firm is $600 per unit. If Firm 1 is the Stackelberg leader and Firm 2 is the follower, find the equilibrium price, level of consumer surplus, and, for each firm, the quantity produced and the resulting weekly profit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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