The inverse demand for a homogeneous-product Stackelberg duopoly is . The cost structures for the leader and the follower, respectively, are and .

a. What is the follower's reaction function?

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

c. Determine the equilibrium market price.

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

The total revenue and marginal revenue function for the followers and leader are given below:

a) The follower's reaction is determined by equating the followers marginal cost and marginal revenue functions:

b) The equilibrium output can be determined by substituting the reaction function of follower in the profit constraint of the leader:

The equilibrium price and output are determined below:

c) The equilibrium market price is calculated below:

d) The profit earned by the follower is:

The profit earned by the leader is: