Suppose that the firms with identical costs and identical products

compete under a Cournot set-up. Suppose that the firms have no fixed costs. The best response function of firm 1 is calculated as: q1=(60q2)/2

q2 = (80 - q1)/2

Which of the following will be correct?

a.(q1 =0, q2 =40) can not be a Nash equilibrium since Firm 2 can increase its profit by changing its quantity.

b.

(q1=5, q2=50) can not be a Nash equilibrium

since Firm 1 can increase its

profit by changing its quantity.

c.

(q1=10, q2=35) can not be a Nash

equilibrium

since Firm 1 can increase its

profit by changing its quantity.

d.(q1=20, q2=30) can not be a

Nash

equilbrium

since Firm 2 can increase its

profit by changing its quantity