A7.3 You are the manager of Billy’s Burritos, one of only two suppliers of tasty fish tacos in town. Billy’s Burritos and its competitor, Ellen’s Enchiladas, compete in a Cournot duopoly. The weekly demand for fish tacos is Q = 187.5 - 12.5P where Q is the quantity of fish tacos and P is the price of a fish taco. The total quantity, Q, of fish tacos is equal to Q = qB + qE where qB is the quantity of fish tacos produced by Billy’s Burritos and qE is the quantity of fish tacos produced by Ellen’s Enchiladas. The demand function can be solved for the price as a function of the quantity, which is the inverse demand:

P = 15 - 0.08Q Each firm incurs a total cost of producing and selling qi fish tacos of TC1qi2 = 120 + 3qi

a. Determine the Cournot quantity of fish tacos that each firm produces each week.

b. When each firm produces its Cournot quantity, what is the resulting market price of a fish taco?