(7) For each situation, solve for the Stackelberg equilibrium 7a) Suppose Sarah's constant MC is $5 but Joe's is $8. (Using P(Q) = 20-0.1Q again and assuming Joe goes first) 7b) Suppose Joe and Sarah have the same marginal cost ($5) but market inverse demand is now P(Q) = 30 -0.2 Q

(7) For each situation, solve for the Stackelberg equilibrium 7a) Suppose Sarah's constant MC is $5 but Joe's is $8. (Using P(Q) = 20-0.1Q again and assuming Joe goes first) 7b) Suppose Joe and Sarah have the same marginal cost ($5) but market inverse demand is now P(Q) = 30 -0.2 Q

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter8: Understanding Markets And Industry Changes

Section: Chapter Questions

Problem 5MC

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(7) For each situation, solve for the Stackelberg equilibrium
7a) Suppose Sarah's constant MC is $5 but Joe's is $8. (Using P(Q) = 20-0.1Q again
and assuming Joe goes first)
7b) Suppose Joe and Sarah have the same marginal cost ($5) but market inverse
demand is now
P(Q)= 30 -0.2 Q

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