Suppose Winchester and Remington are the only producers of pearl-handled 7-shot revolvers. Winchester has constant marginal costs of $200 per gun while Remington's constant marginal costs are $800 per gun. Market demand is Q = 800-0.1P and total quantity supplied is the sum of each company's supply: Q = QW+ QS. Suppose they announce their output simultaneously.

(i) Calculate each firm's best response function

(ii) Plot those functions on one graph.

(iii) How much will each firm produce and what will be the equilibrium price?

(iv) Suppose Winchester's marginal costs rise to $800 per gun. Show how that changes your graph and give the new equilibrium price and each firm's output.