An industry has two firms-a Stackelberg leader and a follower. The price of the industry output...

An industry has two firms-a Stackelberg leader and a follower. The price of the industry output is given by P = 40 - Q, where Q is the total output of the two firms. The follower has a marginal cost of $0. The leader has a marginal cost of $9. How much should the leader produce in order to maximize profits?

Select one:

a. 13

b. 11

c. 12

d. 9

e. 10

Expert Solution

OPTION B IS CORRECT 11

Rahul Sunny answered 2 years ago

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