1. (10pts) Consider the following Cournot Oligopoly model. There are two firms. Market price is given by p = 24?2Q when it is not negative, otherwise price is zero. Firm 1's constant marginal cost equals $2; Firm 2's constant marginal cost equals $4. Each firm pays a fixed cost of $0. a) Find both firms' best response functions. b) Find the Nash equilibrium. Which firm produces more output in equilibrium? c) Illustrate the best response functions and the equilibrium in a clearly drawn graph, with q1 on the horizontal axis

1. (10pts) Consider the following Coumot Oligopoly model. There are two rms. Market price is given by p = 24 2Q when it is not negative, otherwise price is zero. Firm 1's constant marginal cost equals $2; Firm 2's constant marginal cost equals $4. Each rm pays a xed cost of $0. 3) Find both rms' best response functions. b) Find the Nash equilibrium. Which rm produces more output in equilibrium? c) Illustrate the best response functions and the equilibrium in a clearly drawn graph, with ql on the horizontal axis