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stackelberg
I have changed the values and need the model to plug my numbers in.
Please solve with explanations.
1. The inverse demand curve for a Stackelberg duopoly is
P = 5,000 - 3Q.
The leader's cost structure is
CL(QL) = 1250 + 10QL.
The follower's cost structure is
CF(QF) = 250 + 20QF.
a. Determine the reaction function for the follower.
b. Determine the equilibrium output levels for both the leader and the follower.
c. What are the profits for the leader? For the follower?
By OTA: Mufaddal Baxamusa, MBA
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