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The thingamabob industry consists of two Stackelberg competitors producing an identical product. Firm 1 is the...

The thingamabob industry consists of two Stackelberg competitors producing an identical product. Firm 1 is the Stackelberg leader and firm 2 is the Stackelberg follower. The inverse demand equation is P=591-4Q. The total cost equations of the two firms are: TC_1=15Q_1; TC_2=31Q_2.

a. Determine the total revenue equation for each firm.

b. What is the reaction function of each firm?

c. What is the equilibrium output of each firm?

d. What is the market-determined price of thingamabobs?

e. Calculate each firm’s total profit.

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Expert Solution

Rahul Sunny answered 1 year ago
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