Question: Please help me solve this with all the calculations. Consider the following variant of the Dixit model we just discussed. Demand is given by P

Please help me solve this with all the calculations.

Consider the following variant of the Dixit model we just discussed. Demand is given by P = 50 0.01Q. The production function is qi = min{Li ,Ki}. The wage rate is w = 10 and the rental rate of capital is r = 10

a. Solve for firm 2's best response function in period T = 2

b. Solve for firm 2's profits as a function of firm 1's quantity

c. Solve for the two parts that we use to describe firm 1's best response function (BR when MC = w and when MC = w + r) d. What is the range of possible q1 that we can have in equilibrium 5. Given that range, what is the corresponding range of (before fixed costs) profits to firm 2

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