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  3. 2. in st. albert, alberta, there are two bakers, a

2. In St. Albert, Alberta, there are two bakers, Anderson and Carlson. Anderson's bread tastes just...

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Economics

2. In St. Albert, Alberta, there are two bakers, Anderson and Carlson. Anderson's bread tastes just like Carlson's. Anderson has average costs of$1per loaf of bread. Carlson has average costs of$2per loaf of bread. The inverse demand function for bread in St. Albert isp(qA+qC)=6−0.01(qA+qC). Suppose that Anderson and Carlson are Cournot competitors. a. What are the market output and price? Show the Cournot equilibrium graphically. Suppose now that one of the bakers of St. Albert plays the role of Stackelberg leader. Assume that Carlson always gets up an hour earlier than Anderson and has his bread in the oven before Anderson gets started. Anderson always finds out how much bread Carlson has in his oven, and Carlson knows that Anderson knows this. b. What are the output levels? What are the market output and price? Show the Stackelberg equilibrium graphically. ​​​​​​​

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