Assume that two firms (A

Assume that two firms (A

Assume that two firms (A and B) produce identical products in a market. The(inverse) market demand curve is P = 240 -Q where Q is total output from bothfirms Q = qA + qB. Firm A has a total cost function TCA = 100qA and firm B hastotal cost function TCB = 80qB. Firm A has a first mover advantage and is able tochoose its output before firm B.a) What is firm B’s best rest response function to firm A?b) Given firm B’s reaction function, what is firm A’s total revenue from producing quantity qA?c) Find the Stackelberg Equilibrium of each firm.

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