Consider a market with inverse demand PD (Q) = 50 - - -Q, where Q denotes the quantity 2 and P the price. The market is served by two firms, so that Q = 9 +92. Both firms produce the good at constant marginal and average total costs of C = C = 5. None of the answers is correct. Firms have to pay a fixed cost to produce. If the two firms form a collusive monopoly, the industry profit is 200. If the two firms compete in quantities, the market price in the Nash equilibrium is 35. If the two firms compete in quantities, the best response function of firm 1 is q (92) = 50 - 92.