Suppose two rms compete in micro-chip industry. Each period rm 1

produces q1 chips and rm two produces q2 chips and the rms face a demand curve of

P = 500 10Q, where Q = q1 + q2. Both rms have a constant marginal cost of $20 per

chip, C(qi) = 20qi.

What are the static Nash equilibrium strategies for this market? What are profits fora single period in this case? [5]