Question
Consider the case of two theaters, Jay's Cinema (JC) and Mezzanine Inc. (MI). The inverse demand for theater tickets is given as P = 166
Consider the case of two theaters, Jay's Cinema (JC) and Mezzanine Inc. (MI). The inverse demand for theater tickets is given as P = 166 - 4Q, where quantity is measured in thousands of theater tickets per year, representing the combined production of JC and MI, Q = qJC + qMI, and price is measured in dollars per ticket. JC has a marginal cost of $8 per ticket, and MI has a marginal cost of $6. Suppose the market is a Stackelberg oligopoly and JC is the first mover. How much does each firm produce? What will the market price of a movie be? How much profit does each firm earn? (Round up to 1 decimal place if needed.)
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