Question: Need help using Cournot Competition Problem 1. (Cournot Competition) Two profit-maximizing oligopolists produce electricity. They set their productions levels, q1 and 92, simultaneously. Each firm's

Need help using Cournot Competition

Problem 1. (Cournot Competition) Two profit-maximizing oligopolists produce electricity. They set their productions levels, q1 and 92, simultaneously. Each firm's cost function is given by C(q) = 2q. The price of unit electricity is denoted by pe. Suppose that the market demand is given by Q = q1 + q2 = D(Pe) = 10 - Pe. 1. Write down each firm's profit maximization problem. 2. Determine each firm's best response function (i.e., BRI(q2) and BR2(q1)). 3. Determine the optimal (equilibrium) levels of production q, and go. 4. Illustrate that the Cournot equilibrium price pe co is higher than the competitive equi- librium price pe 5. Determine CS, PS, and the deadweight loss

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