Hello,

Kindly assist me with this problem:

Two firms A and B produce goods A and B, respectively. The linear demands for the two goods are, respectively,

QA = 100 - 4 PA + 1.5PB

QB = 120-2PB + 0.5PA

Production costs are constant but not equal:

LACA = LMCA = $2

LACB = LMCB = $3

Using calculus, derive the equations for best response curves.

Sketch a graph of the two best-response curves. Label both axes and response curves.

If firm A expects firm B to set its prices at $20, what is firm A's best response? If firm B predicts firm A will price good A at $36, what is firm B's best response?

What is the Nash equilibrium price and quantity for each firm?

How much profit does each firm earn in Nash equilibrium?

If firm A and firm B set prices of $22 and $35 respectively, how much profit does each firm earn? Why don't they choose these prices then?