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1. (5 points) Take the standard Cournot model with 2 firms, I={1,2}, linear inverse demand P(Q)= 2aQ (note it's slightly different from class), but with

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1. (5 points) Take the standard Cournot model with 2 firms, I={1,2}, linear inverse demand P(Q)= 2aQ (note it's slightly different from class), but with a quasi-fixed cost of (2Fi)2 if any production takes place, that is iI : ci(q)={cq+(2Fi)20ifqi>0ifqi=0 Assume that (F1)2>(F2)2>0 (b) Draw the graph of B1(q2) in the strategy space S=S1S2=[0,2ac][0,2ac] supposing that F1(22ac,232ac). (Make sure to label all axes and points of discontinuity!) 1. (5 points) Take the standard Cournot model with 2 firms, I={1,2}, linear inverse demand P(Q)= 2aQ (note it's slightly different from class), but with a quasi-fixed cost of (2Fi)2 if any production takes place, that is iI : ci(q)={cq+(2Fi)20ifqi>0ifqi=0 Assume that (F1)2>(F2)2>0 (b) Draw the graph of B1(q2) in the strategy space S=S1S2=[0,2ac][0,2ac] supposing that F1(22ac,232ac). (Make sure to label all axes and points of discontinuity!)

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