Question: Consider the interaction between Canada and the OPEC countries discussed in class, where OPEC acts as the leader and Canada as the follower. However,

Consider the interaction between Canada and the OPEC countries discussed in class, where OPEC acts as the leader and Canada as the follower. However, now consider the inverse demand for oil P (Q) = 10 Both firms have constant marginal cost of production equal to $4. What is Canada's reaction curve, i.e., find its optimal quantity qc as a function of OPEC's production qop O O qCA = 10 - 3qop 3-qop 2 qCA 3 N/W 2 = = 8 2 2Q. .

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