Question: The market demand function is given the following equation: P = 3200 - 2Q where Q is the industry's output level. Suppose initially this market

The market demand function is given the following equation: P =

The market demand function is given the following equation: P = 3200 - 2Q where Q is the industry's output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) = 200Q. The firm's marginal cost of production (MC) is equal to the firm's average cost (AC): MC = AC = 200. Now suppose two firms supply this market instead of one firm. Thus, Q = Q1 + Q2 where Q1 denotes the output produced by firm 1 and Q2 denotes the output produced by firm 2. The marginal profit function of firm 1: 3000 - 4Q1 - 2Q2 The marginal profit function of firm 2: 3000 - 2Q1 - 4Q2 What will be the equilibrium output produced by the Stackelberg follower (second - mover) firm? A. 250 B. 375 C. 450 D. 600

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