An industry has two firms, a leader and a follower. The demand curve for the industry's...

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An industry has two firms, a leader and a follower. The demand curve for the industry's output is given by p = 100 – 5q, where q is total industry output. Each firm has zero marginal cost. The leader chooses his quantity first, knowing that the follower will observe the leader's choice and choose his quantity to maximize profits, given the quantity produced by the leader. What output will the leader choose? An industry has two firms, a leader and a follower. The demand curve for the industry's output is given by p = 100 – 5q, where q is total industry output. Each firm has zero marginal cost. The leader chooses his quantity first, knowing that the follower will observe the leader's choice and choose his quantity to maximize profits, given the quantity produced by the leader. What output will the leader choose?

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Lets go through the steps to determine the leaders optimal output Start by understanding the demand ... View the full answer