Fuji and Kodak compete in a Cournot duopoly in the US market for photo film. Suppose that US demand for rolls is Q = 10 - P, where P is the price in dollars. Recall that Fuji is a Japanese firm. If Fuji's marginal cost is equal to $4 per roll and the US government charges a tariff $T per imported roll. Assume T < 1.

When Kodak produces q_K= 2 supplies of output in the US, then Fuji will maximize its profit in the US market by producing q_Funits of output, where

Hint: calculate Fuji's reaction function

q_F= (2 - T) / 2

q_F= 2 - T/2

q_F= 3 - T/2

q_F= (6 - T) / 2