Question: Problem # 2 (9 points): Consider two identical firms (A and B) that face the following linear market demand curve and marginal cost: P =

Problem # 2 (9 points): Consider two identical firms (A and B) that face the following linear market demand curve and marginal cost:

P = 1200 - Q, where Q = Q1 + Q2 and MC = 0.

a)Derive firms A and B output-reaction curves.

b)Calculate the Cournot equilibrium quantity per firm and price in this market.

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