H3 Economics Practice Questions - Singapore GCE Exam - H3 Economics Exam

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In a Stackelberg sequential quantity-setting duopoly with inverse demand P = 100 - Q and MC = 10, Firm 1 chooses output first and Firm 2 chooses output second. What is the equilibrium output of the leader (Firm 1) and follower (Firm 2)?

Firm 1 produces 30 units; Firm 2 produces 30 units Firm 1 produces 22.5 units; Firm 2 produces 45 units Firm 1 produces 60 units; Firm 2 produces 15 units Firm 1 produces 45 units; Firm 2 produces 22.5 units

Correct Answer:

Firm 1 produces 45 units; Firm 2 produces 22.5 units

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