Question: show all steps and graph Part A. Two different firms (say firm I and firm II) producing a homogenous good compete as a Cournot duopoly

show all steps and graph

Part A. Two different firms (say firm I and firm II) producing a homogenous good compete as a Cournot duopoly where qi is the quantity of output produced by firm I, q2 is the quantity of output produced by firm II. Assume that firm II has a higher marginal cost than firm I. (For example, MC=1 and MCI=2) 1. Show on the same graph the reaction function of each firm and indicate on the same graph the Cournot Equilibrium. Put quantity q2 on the vertical axis and quantity q1 on the horizontal axis

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