2) Oligopoly and Game Theory, Pricing Topics

Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: = 200 where and are the quantities sold by the respective firms and p is the selling price. The total cost functions for the two companies are: = 1500 + 55 + 2 = 1200 + 20 + 2 Assume that the firms act independently as in the Cournot model (i.e., each firm assumes that the other firms output will not change). Based upon this information, a. Determine the long-run equilibrium output and selling price for each firm. b. Determine Firm A, Firm B, and total industry profits at the equilibrium solution found in (a).

(Please do not use excel to answer)