Determine the profits of the leader and the follower

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Reference no: EM13183815

The inverse demand for a homogeneous-product Stackelberg duopoly is P = 16,000 - 4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 4,000QL 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.

Reference no: EM13183815

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