A Large Firm That Is a Price Leader in an Industry

Multiple Choice

A large firm that is a price leader in an industry characterized also by many small competing firms estimates that the market demand for its product to be as follows: Q_m = 28,700 - 75P, where Q_m is units per month.
It expects small firms in the industry to supply output according to the following function: Q_s = 1,700 + 25P. What quantity and price will the large firm set?

A) Q = 1,350, P = 135
B) Q = 1,435, P = 143.5
C) Q = 1,350, P = 67.5
D) Q = 1,435, P = 71.75
E) None of the above