Econ 0200 | Homework 04 Due: Friday, February 9, 5PM Homework is designed to both test your knowledge and challenge you to apply familiar concepts in new applications. I welcome and encourage you to work in groups so long as your work is your own. Submit your work on Gradescope. Game 1. Symmetric Two Player Continuous Strategies Suppose there are 2 identical firms in a market, with demand equation P = 1000- 1 Q and each firm has a cost per unit (marginal cost) of MC = $130 and no fixed cost. Find: a) Firm 1's best response function b) Both firm's equilibrium quantity c) Each firm's equilibrium price and profit 100 Reminder: a firm i's profit, i is the difference between their revenue, Ri , and cost, Revenue is the price times their quantity, so Ri = P qi. Cost is their cost per unit times their quantity, so Ci = MCi qi. And lastly, the quantity we use in the demand curve is the sum of all firms' quantity. So with two firms this is Q=q1 q2. With three firms, this is Q=q1 q2 q3