Consider two firms who choose what quantity to produce. They can produce either 0,8 or 16 units of a good, and face a cost of C(Q)=10Q Market demand follows P(Q)=1003Q In the Nash equilibrium of this game, how much does each firm produce? Suggestion: calculate the profits they obtain for each of the 9 combinations (or just 6 , and take advantage of the symmetry of the problem), write down the game in its normal form (payoff matrix), and then use the underlining method to match best responses. One firm produces 16 units, the other produces 0 One firm produces 16 units, the other produces 8 One firm produces 8 units, the other produces 0 0 units each 16 units each 8 units each