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3. Consider the following Cournot game. Suppose there are two sellers of tempered glass, Sang-hee and Deok-su. They compete in a duopoly market with a
3. Consider the following Cournot game. Suppose there are two sellers of tempered glass, Sang-hee and Deok-su. They compete in a duopoly market with a demand curve given by P=300 - Qs - Qo. Both have identical cost functions C(Qs)=30s and C(QD)=30. They choose quantities simultaneously. a. Write down Sang-hee's profit function. (2 points) b. Find Sang-hee's reaction function. (6 points) c. Write down Deok-su's profit function and reaction function. (Hint: you can use symmetry to get the answer directly from the answers you found in parts a and b) (3 points) d. Show both sellers' reaction function in a single graph, with Qs on the horizontal axis, and Q on the vertical axis. Indicate the equilibrium point on the graph. (4 points) e. Calculate the equilibrium quantity chosen by both sellers. (6 points) f. Calculate the profits earned by each seller. (4 points)
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