2. The market demand function is: P = 12 -Q, where P is price and Q is total quantity = qi + q2, the quantities produced by two Cournot competitors, with different marginal costs: MCI =$2 and MCz = $3. The profit for either firm, a = P q - MC q. a) If the firms are trying to decide between producing only 1 or 2 units, draw the game in strategic form and list the Nash Equilibria. 10 b) Sketch the firms' best response functions. 7 c) If the firms can produce any continuous quantity, what is the Nash Equilibrium? At profit-max, for Firm 1: 10-2q1 - q2=0 and for Firm 2: 9 -2q2 - q1 = 0. 8