(30 pts) Two identical firms, Tempastat and Readurtemp, are the only producers of forehead ther- mometers in the market, and behave like Cournot duopolists. The inverse demand for the entire market is P = 400 2(qT + qR ), where qT is Tempstat's production and qR is Readurtemp's produc- tion. The marginal cost for both firms is constant at $80. Neither firm has any fixed costs. Assume they compete against each other in a one-shot game.

1. If the firms decide to maximize industry profit and split it equally, how many units will they sell in total? What is the market price?
2. Tempastat has a marginal revenue curve equal to MRT = 400 4qT 2qR. Briefly explain the reasoning for why the production of Readurtemp plays a role in the marginal revenue curve of Tempastat.
3. Starting with the profit maximizing condition that MR = MC, show that Tempastat's best response function is 80 qR . If Readurtemp acts like half a monopolist, what quantity should Tempastat produce to maximize their profits? What will market price be?
4. Given your answer above, explain why acting like half a monopolist is not a dominant strategy for Tempastat.