Question: Consider a duopoly in which market demand is P = 40-Q, where P is price per unit in dollars and Q is total number

Consider a duopoly in which market demand is P = 40-Q, where P is price per unit in dollars and Q is total number of units, Q = Q + Q2, the sum of production by the two firms. Suppose marginal cost is $8 per unit. a) What is firm 1's reaction function? (Remember to show all work for each answer.) b) What is the Cournot solution (Q) for each firm? What is the equilibrium market price?

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