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Consider a cournot model of a duopoly market where Firm X andFirm Y operate. Each firm has marginal cost equal to $20, and themarket demand

Consider a cournot model of a duopoly market where Firm X andFirm Y operate. Each firm has marginal cost equal to $20, and themarket demand is Q = 100 - (1/2) P. There are no fixed costs.

a) Show the best-response function of each firm.

b) Calculate the profit-maximizing output level for eachfirm.

c) What is the equilibrium price?

d) Calculate the profit for each firm.

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