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Reference the following information about the market demand function for questions 1 to 15. These questions...

Reference the following information about the market demand function for questions 1 to 15.

These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 1600 – Q 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) = 80Q. The firm’s marginal cost of production (MC) is equal to the firm’s average cost (AC): MC = AC = 80.

9) What will be the equilibrium market price in the Cournot model?

10) What will be the profit earned by each of the symmetric firms in the Cournot market equilibrium?

11) Now suppose the two firms engage in the Stackelberg market competition instead. Assume firm 1 is the leader (first-mover) and firm 2 is the follower firm (second-mover). What will be the equilibrium output level produced by the Stackelberg leader (first-mover) firm? The right-hand side (R.H.S.) of the Stackelberg leader's marginal profit function is 760 - Q1

12) What will be the equilibrium output produced by the Stackelberg follower (second – mover) firm?

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