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Two Firms Compete as a Stackelberg Duopoly

Question 52

Multiple Choice

Two firms compete as a Stackelberg duopoly. The demand they face is P = 40 - Q. The cost function for each firm is C(Q) = 4Q. The profits of the two firms are:


A) πL = $162; πF = $81.
B) πL = $81; πF = $40.5.
C) πL = $81; πF = -$40.5.
D) πL = $162; πF = $40.5.

Correct Answer:

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