Question: Suppose the demand function is Q 200 2p
Suppose the demand function is Q = 200 – 2p. Firm A, the leader, acts before Firm B the follower. Both firms have a constant marginal cost of 10. Draw a diagram with Firm A’s output on the horizontal axis. Show the best- response function of Firm B. On the diagram, identify the Nash-Cournot solution, the Stackelberg solution, and the cartel solution.
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