Question: 4. Solve the best-response functions simultaneously to identify the equilibrium quantities. Worked solution In equilibrium, both best-response functions hold simultaneously. Substituting for QB into Alpha's

4. Solve the best-response functions simultaneously to identify the equilibrium quantities. Worked solution In equilibrium, both best-response functions hold simultaneously. Substituting for QB into Alpha's best response function, QA = 224,000 202,000 QA 2 Expanding the brackets, QA = 123,000 + QA 4 or QA = 164,000. Substituting for QA into Beta's best response function we find that QB = 120,000

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