Laban and Jacob are sheep farmers in a differentiated goods market. The market demand for Laban's...

 

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Laban and Jacob are sheep farmers in a differentiated goods market. The market demand for Laban's sheep wool is y = 80 - p1 + p2 while the market demand for Jacob's sheep wool is y2 = 40 - P2+ P. Laban's cost function is C(1) = 24y, while Jacob's cost function is C2(1/2) = 2002. They compete with each other through their choices of price. (a) Calculate the equilibrium in which Laban is the price leader in this market, and Jacob is the price follower. Indicate prices, output levels, and individual profits. (b) How do prices, output levels, and individual profits change if Jacob is the price leader in this market, and Laban is the price follower? Laban and Jacob are sheep farmers in a differentiated goods market. The market demand for Laban's sheep wool is y = 80 - p1 + p2 while the market demand for Jacob's sheep wool is y2 = 40 - P2+ P. Laban's cost function is C(1) = 24y, while Jacob's cost function is C2(1/2) = 2002. They compete with each other through their choices of price. (a) Calculate the equilibrium in which Laban is the price leader in this market, and Jacob is the price follower. Indicate prices, output levels, and individual profits. (b) How do prices, output levels, and individual profits change if Jacob is the price leader in this market, and Laban is the price follower?