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7 September, 01:01

g Consider three firms that face market demand P = 101 - Q. The cost functions are c_1 (q_1) = 5q_1^2 for firm 1, c_2 (q_2) = 3q_2^2 for firm 2, and c_3 (q_3) = 3q_3^2 for firm 3. Firm 1 is the Stackelberg leader and firms 2 and 3 are the followers. What is firm 1's equilibrium output q_1^*?

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  1. 7 September, 02:42
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    The firms equilibrium output is given as:

    q_1 = 0.2c_1

    Explanation:

    Given the cost function for firm 1 is

    c_1 (q_1) = 5q_1^2

    The firms equilibrium output is given as follows:

    c_1 = 5q_1

    q_1 = (1/5) c_1

    = 0.2c_1
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Home » Business » g Consider three firms that face market demand P = 101 - Q. The cost functions are c_1 (q_1) = 5q_1^2 for firm 1, c_2 (q_2) = 3q_2^2 for firm 2, and c_3 (q_3) = 3q_3^2 for firm 3. Firm 1 is the Stackelberg leader and firms 2 and 3 are the followers.
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