The inverse demand for water is P=140-20Q, where Q is total market output and P is the market price. Two firms, A and B, have complete control over the water supply and have zero costs. Assuming the two firms compete on quantity, what is the quantity of water produced by firm A?

When two firms compete by choosing the quantity to produce, they engage in Cournot competition. In this set-up Firm A will choose the quantity to produce so as to maximize profits, recognizing that profits not only depend on his choice of quantity but also his competitor behaviors.