Two firms are participating in a Cournot duopoly. The demand function in the market

isgivenbyQ=4302P. Eachfirm'stotalcostisgivenbyC(q)=5q+q2.

(1) (5 points) Write down the inverse demand function and the maximization problem

for Firm 1 given that Firm 2 is expected to produceq2e.

(2) (5 points) Write down the reaction functionq1q2efor Firm 1.

(3) (10 points) Find the market price, quantities supplied, and firms' profits in the Cournot equilibrium of this game.