Suppose duopolists face the market inverse demand curve P = 100 - Q, Q = q1 + q2, and both firms have a constant marginal cost of 10. If firm 1 is a Stackelberg leader and firm 2's best response function is q2 = (100 - q1)/2, at the Nash-Stackelberg equilibrium the prices the two firms charge are
A) P1 = 40, P2 = 40.
B) P1 = 30, P2 = 30.
C) P1 = 30, P2 = 40.
D) P1 = 40, P2 = 30.
A
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