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Consider the following information: Inverse market demand: P = 12 - 0.5( q 1 + q 2 ), where q 1 and q 2 are
Consider the following information:
Inverse market demand:P= 12 - 0.5(q1+q2), whereq1andq2are Firm 1's and Firm 2's output
Firm 1's reaction function:q1= 9 - 0.5q2
Firm 2's reaction function:q2= 9 - 0.5q1
The marginal cost of production for both firms is constant at $3. The equilibrium prices in Cournot and Stackelberg competition are _____ and _____, respectively.
$6; $5.25
$9; $10
$4; $3.50
$8; $7
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