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Stackelberg Duopolists, Firm 1 and Firm 2, Face Inverse Market P=50QP = 50 - Q

Question 6

Multiple Choice

Stackelberg duopolists, Firm 1 and Firm 2, face inverse market demand P=50QP = 50 - Q . Both have marginal cost, MC=$20M C = \$ 20 . If the follower takes the leader's output as fixed at Q1Q _ { 1 } , what is the equation of its reaction function?


A) 30Q1=Q230 - Q _ { 1 } = Q _ { 2 }
B) 15Q1=Q215 - Q _ { 1 } = Q _ { 2 }
C) 152Q1=Q215 - 2 Q _ { 1 } = Q _ { 2 }
D) 15Q1/2=Q215 - Q _ { 1 } / 2 = Q _ { 2 }

Correct Answer:

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