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Consider a market with two firms where the inverse demand function is given by p= 502 q where q=q1+q2. The firms have cost functions c

Consider a market with two firms where the inverse demand function is given by p= 502 q where q=q1+q2. The firms have cost functions c ( q1 )=10+2 q1 and c ( q2)=12 + 8q2 respectively.

Calculate the Cournot equilibrium and illustrate the equilibrium in a graph illustrating the best response functions. (6 marks)

Calculate the price and the profit of each firm. (4 marks)

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