Analytical Questions (65 points): 1. (15 points) Suppose the market inverse demand for an office chair in a small town is = 100 20 and that there are only two firms, A and B, who supply it in the town, each with a total cost function of = 20 + 60. (Solve for the Cournot Equilibrium)

a) (5 points) Best response function (both firms)

b) (5 points) Equilibrium output (both firms)

c) (2 points) The overall resulting market price and total quantity produced.

d) (3 points) Profit (both firms)