Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function:

P = 600 −QC −QD

Where QC and QD are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are

TCC = 25,000 + 100QC

TCD = 20,000 + 125QD

Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firm’s output will not change).

a. Determine the long-run equilibrium output and selling price for each firm.

b. Determine the total profits for each firm at the equilibrium output found in Part (a).