5. (10) In the Cournot model we did in class with two rms (q1 and q2 being the amounts produced by the two rms) the best response of rm 1 to q2 being rm 2s conjectured production is given by q1 = (3 q2)=2 or, rewriting, 2q1 q2 = 3: Writing a similar expression for Player 2, we obtained q1 = q2 = 1 as the unique Nash equilibrium. If there are n rms in the market, the best response of rm 1 to q2; q3; :::::; qn can be calculated by choosing q1 to maximise f4 (q1 q2 q3:::: qn) 1gq1 giving 2q1 q2 ::::: qn = 3: Setting all the qi equal, what is the Nash equilibrium, say, for n=5? What is the equilibrium price? Is (price-marginal cost) greater for n=5 than for n=2? 5