Suppose two firms face market demand of P=130-Q, Both firms have the same unit cost of 30. Assume the firms compete a la Stackelberg. Firm 1 is the leader and Firm 2 is the follower in this market.What is the follower’s total revenue function? Determine the equilibrium output level for both the leader and the follower. Determine the equilibrium market price. Determine the profits of the leader and the follower.

A stackleberg firm chooses its output level sequentially

Answered: P=130-Q, Both firms have the same unit…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose two firms face market demand of P=130-Q, Both firms have the same unit cost of 30. Assume the firms compete a la Stackelberg. Firm 1 is the leader and Firm 2 is the follower in this market.

What is the follower’s total revenue function?
Determine the equilibrium output level for both the leader and the follower.
Determine the equilibrium market price.
Determine the profits of the leader and the follower.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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