1. Derive expressions for the best response functions for these two firms.
2. Suppose you are the manager of firm 2. If your rival (firm 1) produces 50 units of output, what is your optimal level of output?
3. In equilibrium, how much will each firm produce in a Cournot duopoly?
4. In equilibrium, what is the output of the leader and follower in a Stackelberg duopoly?
5. How much output would be produced if the market were monopolized?
6. Suppose your firm and firm 1 agree to a collusive arrangement in which each firm produces half of the monopoly output

(i) What is your output under this collusive arrangement?

(ii) What is your optimal output if you believe your rival will live up to the collusive

arrangement?