Question: Please write the answer clearlythanks. 1. There are two auto producers in Karmania, F1 and F2. The cars they produce are essentially identical. The marker
1. There are two auto producers in Karmania, F1 and F2. The cars they produce are essentially identical. The marker inverse demand curve is given by p=a-bQ, where p is the price (in thousands of dollars); Q market output (in thousands of units); and a and b are parameters. It is estimated that a = 25 and b = 0.1. Both F1 and F2 have a marginal cost of 10 thousand dollars per car. Competition in the Karmania auto market works as follows. At the beginning of each year, both firms simultaneously and independently decide how many cars to produce. Then the market price adjusts to so that supply equals demand. ( (1) What is firm Fi's best response mapping? Hint: If firms Fl's profit is 11 = o+a191+229 +239192, where Qo, Q1, 02, 03 are parameters, 91 is firm Fl's quantity supplied, and q2 is firm F2's quantity supplied. Then firm Fl's best response mapping is 91= 202 20292- [] (2) What is the equilibrium of the game played between F1 and F2? 03 92 Hint: At equilibrium, the equilibrium output for firm F1 is the same as that for firm F2
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