Suppose a market is served by two firms (a duopoly)

Suppose a market is served by two firms (a duopoly). The market demand function given by P= 1200-Q1-Q2 where Q1 is the output produced by firm 1 and Q2 is the output produced by firm 2. Firm l's cost of production is given by the function C(Q1) = 12001 and firm 2's cost of production is given by the function C(Q:) = 120Q2. The average cost of firm 1 is given by AC1 = 120 and the average cost of firm 2 is given by AC; = 120. Arti Marginal profit function for firm 1: 1080 - 2Q1-Q2 AQ1 Marginal profit function for firm 2: Δπ2 AQ2 = 1080 – Q1 - 2Q 2
22. What will be the equilibrium output level produced by the Stackelberg leader (first-mover) firm? Note - Assume firm 1 is the Stackelberg leader and firm 2 is the Stackelberg follower. Stackelberg leader's marginal profit function: =540-Q1, AQ1 (A) 450 (B) 540 (C) 504 (D) 405 23. What will be the equilibrium output level produced by the Stackelberg follower (second-mover) firm? (A) 270 (B) 360 (C) 420 (D) 450 24. What will be the equilibrium profit levels earned by the Stackelberg leader firm and the Stackelberg follower firm? (A) $145,400, $72,900 (B) $145,800, $72,900 (C) $142,400, $80,500 (D) $72,900, $72,900