GA

2. Two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following demand function:

P = 5,000 - 0.5(QA + QB)

where QA and QB are the quantities sold by the respective firms and P is the selling price.

Total cost functions for the two companies are:

TCA = 250,000 + 100QA + .25QA2

TCB = 100,000 + 200QB + 0.5QB2

(a)Determine the long-run equilibrium output and selling price for each firm.

(b)Determine the total profits for each firm at the equilibrium output found in part (a)