Question

The market demand function is

Q = 10000 - 1000p

Each firm has a marginal cost of m=​$0.28. Firm​ 1, the​ leader, acts before Firm​ 2, the follower. Solve for the​ Stackelberg-Nash equilibrium​ quantities, prices, and profits. Compare your solution to the​ Cournot-Nash equilibrium. The​ Stackelberg-Nash equilibrium quantities are

q1 = ____ units and q2= ____ units.  ​(Enter your responses as whole​ numbers.)

The Stackelberg-Nash equilibrium price is:

p=$_____________

Profits for the firms are

profit1=$_______________

and profit2=$_______________

The Cournot-Nash equilibrium quantities are:

q1=______________units

and q2=______________units

The Cournot-Nash equilibrium price is:

p=$______________

Profits for the firms are

profit1=$_____________ and profit2=$_______________

Answer 1

8 = 10000 – 1080p p= 10- Mc = 6.28 81= lender = (a 2XL looo - (10-0.28) 2X1000 = 9.72 Soo = 9.728 500 leader a. = 4860 s a 9 = 9.72 250 = 9.72x250 = 2380 & followers P= 10- 1(2380+ 4860) 1000 7235 . 2 10 1ooo Priu. = 1= 10- 7.23 2076 - Stackelberg TR-TC Profita = 4860 X 2.76 - 486x 0.28 - 13,413.6- 13608 12,053.81

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