Assume that the market demand and the costs of the duopolists are: P=120-0.4(QA + QB) TCA=5QA TCB= 0.2Q2B Also assume that firm B is the sophisticated leader, Determine: 1. The reaction curve of A 2. The reaction curve of B 3. The profit function of A 4. Stackelberg equilibrium output level for firm A 5. Stackelberg equilibrium output level for firm B 6. The market price.

/in /by

Assume that the market demand and the costs of the
duopolists are:

P=120-0.4(QA + QB)

TCA=5QA

TCB= 0.2Q2B

Also assume that firm B is the sophisticated leader, Determine:

1. The reaction curve of A

2. The reaction curve of B

3. The profit function of A

4. Stackelberg equilibrium output level for firm A

5. Stackelberg equilibrium output level for firm B

6. The market price.

You might also like
Discuss the relationship between the three short-run total cost curves. Use a diagram to motivate your answer.
Can you explain why taking a monotonic transformation of a utility function doesn’t change the marginal rate of substitution?
The market is unable to provide national defence efficiently.” Discuss this statement critically.
In a certain market, the demand for peach was given as QD = 400 -3P, the first day of marketing in 2020, in August 2020, the demand for peach is now given as QD = 200 -3P. From the statement above tell in one sentence the change in demand; what did you consider as the indicator? Support your answers by sketching the equations above on the same graph sheet.
What are the advantages and disadvantages of a Monopoly?
Suppose widgets have a price elasticity of demand equal to -1.95 and cross elasticity of demand equal to 2 with dundles. What are the pricing options for a firm that sells widgets? Explain
Give brief but succent conceptual discussion on welfare theory and resource allocation.
Suppose that your company is offered a contract to produce 1,000 units of a good X per day. Your company uses labor and capital to produce good X. The quantity of labor used, _L_, is expressed by hours of work, and the wage rate is $10 per hour. The quantity of capital utilized, _K_, is expressed in machine-hours, and the rental rate per machine hour is $40. Thus total cost of production is TC = 10L + 40K. The production function is given by Q = 20L 0.5 K 0.5. In the contract, your company is required to produce 1,000 of good X. a) Using the Lagrange function, determine the amount of labor and capital to use to minimize the cost of producing 1,000 units of good X. (14 marks) b) Interpret lambda and what it means to your company. (6 marks)