The duopolists Carl and Simon face a demand function for pumpkins of Q = 2,200 - 400P, where Q is the total number of pumpkins that reach the market and P is the price of pumpkins. Suppose further that each farmer has a constant marginal cost of $1.50 for each pumpkin produced. If Carl believes that Simon is going to produce Qs pumpkins this year, then the reaction function tells us how many pumpkins Carl should produce in order to maximize his profits. Carl's reaction function is
A) RC(Qs) = 400 -.
B) RC(Qs) = 2,200 - 800Qs.
C) RC(Qs) = 800 -.
D) RC(Qs) = 2,200 - 400Qs.
E) RC(Qs) = 1,200 - Qs.
Correct Answer:
Verified
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