Consider a Stackelberg duopoly with the following inverse demand function: P = 100 - 2Q₁ - 2Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 2Q_i.Based on this information the Stackelberg leader's marginal revenue function is A)MR(Q_L) = 50 - 2Q_L + c₁. B)MR(Q_L) = 50 - 2Q_L + c₂. C)MR(Q_F) = 100 - 2Q_F + c₁. D)MR(Q_F) = 100 - Q_F + c₂.

Question

Quizplus · Accepted Answer

The marginal revenue function for the Stackelberg leader is calculated by taking the derivative of the inverse demand function with respect to Q_L, and then subtracting the marginal cost of the leader. Therefore, the correct marginal revenue function is: MR(Q_L) = 100 - 4Q_L - 2c₂ - 2c₁ Simplifying and rearranging, we get: MR(Q_L) = 50 - 2Q_L + c₂ Therefore, the correct answer is B.

Consider a Stackelberg Duopoly with the Following Inverse Demand Function