5.* MBI and Pear are the only two producers of computers. MBI started producing earlier than...

  

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5.* MBI and Pear are the only two producers of computers. MBI started producing earlier than Pear. MBI's costs of production are given by C(31) = y. Pear's cost function is C2(32) = 5y2. The national demand for computers is y = 106 105p. (a) Calculate the Stackelberg equilibrium in which MBI is the leader in this market. Indicate output levels, market price, and the profits of each firm. (b) Suppose that both firms enter this market at the same time. Calculate the Cournot equilibrium and compare it to the situation in part (a). 5.* MBI and Pear are the only two producers of computers. MBI started producing earlier than Pear. MBI's costs of production are given by C(31) = y. Pear's cost function is C2(32) = 5y2. The national demand for computers is y = 106 105p. (a) Calculate the Stackelberg equilibrium in which MBI is the leader in this market. Indicate output levels, market price, and the profits of each firm. (b) Suppose that both firms enter this market at the same time. Calculate the Cournot equilibrium and compare it to the situation in part (a).

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To calculate the Stackelberg equilibrium where MBI acts as the leader we need to follow these steps ... View the full answer