Question: Draw a graph that shows the effect on the equilibrium quantities if the government subsidizes one firm in a Cournot duopoly with a per-unit subsidy.

Draw a graph that shows the effect on the equilibrium quantities if the government subsidizes one firm in a Cournot duopoly with a per-unit subsidy. Assume that the best-response functions are linear. Explain the new equilibrium quantities.(hints: show how this subsidy affects the best response curve(s) in a graph)

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