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Question Four _ (10 marks) engaged in Stackelberg competition. They face the market inverse demand curve: P =60-0.5Q, where Q is the total market output,
Question Four _ (10 marks) engaged in Stackelberg competition. They face the market inverse demand curve: P =60-0.5Q, where Q is the total market output, consisting of Rio Tinto's output, gg, and Santos's output, gs. Each firm produces at a constant marginal and average cost of $12 per ton of zinc mined. Assume that Rio Tinto moves first to set its quantity. a) In a Stackelberg equilibrium, how many tons of zinc will Rio Tinto produce? (3 marks) b) How many tons of zinc will Santos Metals produce? (3 marks) c) What will be the market price of zinc be? (2 marks) d) How much profit does each firm earn? (2 marks)
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