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2. In a market two identical firms can produce a good with a marginal cost of $1. The market demand function is: P = 5

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2. In a market two identical firms can produce a good with a marginal cost of $1. The market demand function is: P = 5 - Q, where P is price and Q is total quantity, or q1 + q2, the quantity each firm produces. Thus, the profit for Firm 1, m1 = Pq1 - q1 (similar for Firm 2). a) If each firm produces a discrete quantity of up to 3 units, draw the game in strategic form b) List the pure Nash Equilibria of the game. Sketch the firms' best response functions. c) If firms can produce any (continuous) quantity, what is the Nash Equilibria of the game

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