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

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 CL(QL) = 3,000QL and CF (QF) = 6,000QF..

 

a. What is the follower's reaction function?

 

QF =  -  QL

 

 

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: $  

 

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