Question: Eyeone and SafetyTwo are a cournot duopoly. Inverse demand function of P=160-2Q where total output is Q=Q1+Q2, Eyeone (Q1) SafetyTwo(Q2). Monthly cost is estimated as

Eyeone and SafetyTwo are a cournot duopoly. Inverse demand function of P=160-2Q where total output is Q=Q1+Q2, Eyeone (Q1) SafetyTwo(Q2). Monthly cost is estimated as C=4Q for both. Eyeone is considering making a monthly investment of $200. If their campaign is successful they will steal market share and become the leader the leader (Stackleberg).

Stackelberg:

1. What is eyeone's output level?

2. what is eye one's price?

3. what is eyeone's profit?

4. Should eye one move forward with $200 monthly investment? Explain.

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