Question: I have completed this problem, but I am not sure if I did it right. For part 1.1, I got q1(q2) = 99/2 - q2/2
I have completed this problem, but I am not sure if I did it right.
For part 1.1, I got q1(q2) = 99/2 - q2/2 and q2(q1) = 99/2 - q1/2
For part 1.2, I got q1 = 33 and q2 = 33.
Please verify I have the correct solution and include steps to make sure I did it right.
Consider a market with two firms. Demand in this market is given by p(Q) = 100Q. The two firms have identical cost functions equal to C(q) = 10q. Suppose the two firms are engaged in Cournot competition, meaning that they each set their quantity independently andQ=q1+q2.
1.1. What is each firm's best response function?
1.2. What is each firm's Nash equilibrium quantity and profit?
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