The following is a simplified duopoly model of competition between two firms. Firms simultaneously choose the quantity of outputs to produce, and then profits are realized.

Question 6 (2 marks). The following is a simplified duopoly model of competition between two firms. Firms simultaneously choose the quantity of outputs to produce, and then profits are realized. Each firm is restricted to producing 25, 35, 50 or 100 units of output. The details of how the payoffs are derived are unimportant because payoffs are all given in the table below. What is the pure-strategy Nash equilibrium(a)? Firm 2 Q2= 25 02= 35 Q2= 50 92= 100 01= 25 125, 125 100, 140 63, 125 -63, -250 Firm 1 21= 35 140, 100 105, 105 53, 75 -123, -350 91= 50 125, 63 75, 53 0, 0 -250, -500 Q1= 100 -250, -63 -350, -130 -500, -250 -900, -900