1) Firms 1 and 2 produce differentiated goods. Firm 1's inverse demand function is p1 = 260 - 2_q1 - q2, while Firm 2's inverse demand function is p2 = 260 - 2q2 - q1. Each firm has a constant marginal cost of 20.

1. what is the best response funtion of Firm 1?
2. What is the best response funtion of Firm 2?
3. what is the Nash Cournot equilibrium in this market?

(Explain the answer with diagram)

2) Suppose that you and a friend play a "matching pennies" game in which each of you uncovers a penny. If both pennies show heads or both show tails, you keep both. If one shows heads and the other shows tails, your friend keeps them. Show the payoff matrix.

1. what, if any, is the pure-strategy Nash equilibrium to this game?
2. Is there a mixed strategy Nash equilibrium? If so, what is it?