Use the following figure to answer the question : Figure 13-1 : shows the Stackelberg model of a duopoly.Both firms face constant marginal costs equal to OJ and the market demand curve is AD.The Stackelberg firm produces an output of OF and OF is equal to FL.
-Refer to Figure 13-1.The Stackelberg firm's residual demand curve is given by:
A)AC
B)BCD
C)BE
D)JCD

Question

Use the following figure to answer the question : Figure 13-1 :  shows the Stackelberg model of a duopoly.Both firms face constant marginal costs equal to OJ and the market demand curve is AD.The Stackelberg firm produces an output of OF and OF is equal to FL. 
-Refer to Figure 13-1.The Stackelberg firm's residual demand curve is given by:
A)AC 
B)BCD 
C)BE 
D)JCD

Quizplus · Accepted Answer

In a Stackelberg model of duopoly, the firm that sets its output first (the Stackelberg leader) faces the market demand curve minus the output of the follower. The residual demand curve for the Stackelberg leader is thus the portion of the market demand curve that remains after subtracting the quantity supplied by the follower. In this context, BCD represents the correct residual demand curve for the Stackelberg leader, as it starts from the total market demand and adjusts for the follower's output.

Use the Following Figure to Answer the Question : Figure