Consider a Stackelberg duopoly with the following inverse demand function: P = 100 − 2Q₁ − 2Q₂.The firms' marginal costs are identical and are given by MC_i = 2.Based on this information,the Stackelberg follower's marginal revenue function is: A) MR_F(Q_L,Q_F) = 100 − 2Q_L − 4Q_F. B) MR_F(Q_L,Q_F) = 100 − 4Q_L − 2Q_F. C) MR_F(Q_L,Q_F) = 100 − 2Q_L − Q_F. D) MR_F(Q_L,Q_F) = 100 − Q_L − 2Q_F.

Question

Quizplus · Accepted Answer

The Stackelberg follower's marginal revenue function is given by MRF(QF,QL) = dP/dQF, where P is the inverse demand function. In this case, the inverse demand function is P = 100 − 2Q₁ − 2Q₂, and differentiating with respect to QF gives -2Q₂. Substituting Q₂ = (1/2)(100-Q_L-Q_F) gives MRF(Q_F,Q_L) = 100 − 2Q_L − 4Q_F, which is option A.

Consider a Stackelberg Duopoly with the Following Inverse Demand Function