Determine the profits of the leader and the follower

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Reference no: EM131101763

The inverse demand for a homogeneous-product Stackelberg duopoly isP = 20,000 -4Q. The cost structures for the leader and the follower, respectively, areCL(QL) = 2,000QL andCF (QF) = 4,000QF..

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: $

Reference no: EM131101763

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