BM1 slide 38 (Cournot). Use the notation and values in that slide, and solve for the Cournot equilibrium. You need to solve the model using profit-maximizing methods and show all steps. Just copying the answer from the next slide or from BM2 (Cournot) is not good as in the test I will ask you to show the derivation steps, with credit for showing the right steps. So, please practice it now.

Cournot Quantity Competition Production of copier/printer paper O Market demand for paper: P = A - BQ = A - B(q1+q2) o A is intercept (e.g., 500) o B is slope (e.g., 1.25) o q1 and q2 are the firms' outputs (production quantities) . Two firms have common MC=c (e.g., $25/unit of production) . We only discuss the concepts and final equilibrium . We will also go over companion set of slides with details and derivations on Cournot competition - slides BM2. Vivek Ghosal. Regulation, Competition, Firm Behavior. Fall 2020.Cournot Quantity Competition Production of copier/printer paper O 92 q*1 = (A - c)/2B - q*/2 (A-c)/B q*= = (A - c)/2B - q* /2 Firm 1's response function (A-c)/2B .: q* = (A - c)/3B (A-c)/3B C Firm 2's response function .: q*, = (A - c)/3B 91 (A-c)/2B (A-C)/B (A-C)/3B Vivek Ghosal. Regulation, Competition, Firm Behavior. Fall 2020