In Farmland, only Hubert and Alison can raise free-range chickens on their farms. Assume that Hubert and Alison can collect and sell a large quantity of eggs at no cost and that free-range eggs produced outside Farmland cannot be transported into the town for sale. The following questions will walk you through the process of computing the equilibrium result using the Stackelberg model.

Suppose that, in this market, Hubert decides how many eggs per day he is going to produce, and then Alison makes her decision after observing Hubert's quantity choice. The market demand for eggs is given byQ=20?P

Use the purple line (diamond symbol) on the following graph to illustrate Alison's best-response function as determined by the quantity of eggs Hubert decides to produce.

20 18 16 ANson's BR 14 12 ALISON'S QUANTITY (Gross of eggs per day) 10 10 12 14 15 18 20 HUBERT'S QUANTITY (Gross of eggs per day)20 A 18 16 Hubert's ND PRICE (Dollars per gross ) 14 12 Hubert's MR 10 Profit Max MIC 2 4 10 12 14 16 QUANTITY (Gross of eggs per day) WHubert's Alison's Total Emerging Market Production Production Production Price (Gross per day) Gross per day) (Gross per day) (Dollars per gross) + 4 + 20 +