Multiple Choice
A duopoly faces the demand curve D(p) = 30 - .5p.Both firms in the industry have a total cost function given by C(q) = 4q.Suppose that firm 1 is a Stackelberg leader in choosing its quantity first.Firm 1's profit function can be written as
A) q1 = 14 - .5q2.
B) q2 = 14 - .5q1.
C) 28q1 - q21.
D) 56q1 - q21.
E) 60q - q2.
Correct Answer:
Verified
Correct Answer:
Verified
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