1. Suppose there are two firms, A and B, operating in a market and compete on output choices. No other firms can enter the market. Suppose further that the market demand curve is: P = 24800 - 200(Q_A+Q_B)

Further, suppose that the marginal costs for both firms is constant and equal to $800, and there are no fixed costs.

1A. Calculate and draw each firms best response function. Put Q_A on the Y axis and Q_B on the X axis.

1B. Solvefor the Nash Equilibrium output levels for each firm, and calculate the market price and the corresponding economic profits for each firm. Identify this point on the graph you drew in part a.