Question

Market demand P = 820 – 2Q is supplied by a Stackelberg leader and a follower both of whom have marginal costs of $20 per unit. How much output will the leader produce?

Answer 1

since marginal costs can be defined as costs per unit we can assume that $MC=P=20$

then

$P = 820 – 2Q => 20=820 - 2Q$

$-800=-2Q => Q= 400$

Answer: The leader will produce 400 units