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(10 points) Consider a market with three firms producing a homogenous product. First, firm 1 selects a quantity q1 to produce. Firm 1's quantity is
(10 points) Consider a market with three firms producing a homogenous product. First, firm 1 selects a quantity q1 to produce. Firm 1's quantity is observed by both firm 2 and firm 3. Then, firm 2 and firm 3 simultaneously and independently choose their own quantities q2 and q3 to produce. The inverse market demand is given by p(Q) = 340 - Q, where Q = q1 + q2 + q3. Firm 1 has a constant marginal cost of 20 per unit. Firm 2 and firm 3 each have a constant marginal cost of 40 per unit. Assume for simplicity that there is no fixed cost of production. Each firm would like to maximize its own profit. Calculate the quantity chosen by each firm and the profit earned by each firm in equilibrium
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