The inverse demand for a homogeneous-product Stackelberg duopoly is P = 18,000 -5Q. The cost structures...

The inverse demand for a homogeneous-product Stackelberg duopoly is P = 18,000 -5Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 2,000QL and CF (QF) = 4,000QF..

a. What is the follower’s reaction function?

Q_F=_____ - ______ Q_L

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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Expert Solution

Rahul Sunny answered 2 months ago

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