Econ 402: Strategy

In a Cournot game with homogeneous commodities, players are firms who simultaneously announce quantities they want to produce. Suppose there are two firmss1 and 2, whose chosen quantities are q1 and q2 respectively. The market price is given by P = 12 - 1.5Q where Q = q1 + q2. The constant marginal cost of each firm is 3. a) (12 points) What is the best response function for each firm? b) (6 points) What is the best response quantity for each firm to produce? c) (6 points) What is the market price? d) (6 points) What is the profit for each firm? Type your answers in the text box below. Work must also be included in the text box to receive full credit