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How much output should grenada announce it will produce

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Reference no: EM131112037

The market for nutmeg is controlled by two small island nations, Penang and Grenada. The market demand for bottled nutmeg is given by P = 100 ? qP ? qG, where qP is the quantity Penang produces and qG is the quantity Grenada produces. Both Grenada and Penang produce nutmeg at a constant marginal and average cost of $20 per bottle. Suppose that Grenada transforms the nature of competition to Stackelberg competition by announcing its production targets publicly in an attempt to seize a first-mover advantage. How much output should Grenada announce it will produce as the Stackelberg leader?

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Reference no: EM131112037

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