2a) There are only two bakers in East Buford: Alpha and Beta. Total demand for loaves of bread in East Buford is QD= qA + qB = 600 - 100P. Alpha's cost function is CA = 20 + 2qA, and Beta's is CB = 20 + 2qB. Every morning, Alpha wakes up at 3AM and gets her bread in the oven. Beta wakes up at 4:30AM, finds out how much bread Alpha's already baking, and then chooses her quantity. Alpha and Beta both know all this information.

Beta's best response function to a given level of production by Alpha is:

2b) There are only two bakers in East Buford: Alpha and Beta. Total demand for loaves of bread in East Buford is QD= qA + qB = 600 - 100P. Alpha's cost function is CA = 20 + 2qA, and Beta's is CB = 20 + 2qB. Every morning, Alpha wakes up at 3AM and gets her bread in the oven. Beta wakes up at 4:30AM, finds out how much bread Alpha's already baking, and then chooses her quantity. Alpha and Beta both know all this information.

Alpha's marginal revenue function is:

2c)There are only two bakers in East Buford: Alpha and Beta. Total demand for loaves of bread in East Buford is QD= qA + qB = 600 - 100P. Alpha's cost function is CA = 20 + 2qA, and Beta's is CB = 20 + 2qB. Every morning, Alpha wakes up at 3AM and gets her bread in the oven. Beta wakes up at 4:30AM, finds out how much bread Alpha's already baking, and then chooses her quantity. Alpha and Beta both know all this information.

Please fill in the following: qA = _____, qB = ______, Price of Bread P = _______

2d)There are only two bakers in East Buford: Alpha and Beta. Total demand for loaves of bread in East Buford is QD= qA + qB = 600 - 100P. Alpha's cost function is CA = 20 + 2qA, and Beta's is CB = 20 + 2qB. Every morning, Alpha wakes up at 3AM and gets her bread in the oven. Beta wakes up at 4:30AM, finds out how much bread Alpha's already baking, and then chooses her quantity. Alpha and Beta both know all this information.

The profits of the two firms are Profit Alpha = ___________ and Profit Beta = _____________

2e)West Buford is over a day away, so it represents a totally separate market for fresh bread. West Buford also has two bakers: Eta and Zeta. Eta and Zeta both get up at the same time, so they choose their production simultaneously. They are considering forming a cartel. Each baker can either cooperate (restricting output to raise the price) or he can compete. The profits each will earn are:

(E, Z)Z: CoopZ:CompeteE: Coop(400,400)(100,550)E:Compete(550,100)(200,200)

Find the Nash Equilibrium in this game, explain why it is a Nash equilibrium, and explain the implications for Eta and Zeta's cartel. For full points, you must explain the process behind the underlining using the numbers (IF Z = , then E plays ___ because...).Remember that Nash equilibrium has a very specific definition.