Two firms compete as a Stackelberg duopoly. The demand they face is P = 40 ? Q. The cost function for each firm is C(Q) = 4Q. The profits of the two firms are:
A. ?L = $81; ?F = ?$40.5.
B. ?L = $162; ?F = $40.5.
C. ?L = $162; ?F = $81.
D. ?L = $81; ?F = $40.5.
Answer: C
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