The inverse demand for a homogeneous-product Stackelberg duopoly is P = 12,000 -5Q

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The inverse demand for a homogeneous-product Stackelberg duopoly is P = 12,000 -5Q. The cost structures for the leader and the follower, respectively, are C_L(Q_L) = 3,000Q_L and C_F (Q_F) = 6,000Q_F..

 

a. What is the follower's reaction function?

 

Q_F =  -  Q_L

 

 

b. Determine the equilibrium output level for both the leader and the follower.

 

Leader output: 

 

Follower output:  

 

 

c. Determine the equilibrium market price.

 

$   

 

 

d. Determine the profits of the leader and the follower.

 

Leader profits: $  

 

Follower profits: $