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3) Consider a market with two firms that compete in the style of Stackelberg. They choose their quantities sequentially: Firm A (the leader) chooses its

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3) Consider a market with two firms that compete in the style of Stackelberg. They choose their quantities sequentially: Firm A (the leader) chooses its quantity first, Firm B (the follower) chooses its quantity later. The market demand is Q(p) = 11 - p. Firm A's cost function is c.(q.) = 4 + q. if q. > 0, c.(q.) = 0 if q. = 0. Firm B's cost function is c.(q.) = 4 + q. if q. > 0, c.(q.) = 0ifq. =0. Please compute the Stackelberg equilibrium quantities. (Be careful with the follower's best response in stage 2: For some values of q., Firm B's best response may be to produce q, = 0.)

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