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Problem 4: [20 pts] Consider the Cournot duopoly discussed in lecture. Suppose that the demand curve is now P(q1 + 92) = 130-2(q1 +92). Suppose

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Problem 4: [20 pts] Consider the Cournot duopoly discussed in lecture. Suppose that the demand curve is now P(q1 + 92) = 130-2(q1 +92). Suppose that firms 1 and 2 simultaneously choose quantity q1 and 92 to supply and that the firms incur a marginal cost of production equal to 10. Assume that the quantities that each firm can supply are [0, 65]. As a result, each firm's utility function is given by: u1 (91, 92) = (130 - 2(q1 + 92) )q1 - 10q1 U2(91, 92) = (130 - 2(q1 + 92) )92 - 10q2

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