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?
45
40
35
30