1. Using the best response functions you calculated in the previous question, calculate how much each firm produces at the Nash Equilibrium for this game.
2. Using the
   

Firm A and Firm B sell identical goods Total market demand for the good is: Q(P) = 35,100 - 45P The inverse demand function is therefore 1 P(QM) = 780 45 Q = 780 - 0.022220M Qw is total market production (i.c., combined production of firm's A and B. That is: QM = QA + QB As a result, the inverse demand curve for each firm is: P(QA, QB) = 780 - 1 1 45 QA 45 QB = 780 - 0.02222QA - 0.02222QB Unlike the example in class, the two firms have different costs. TCA (QA) = 400QA TCB (QB) = 260QBTote/ leveme lok/ lest) a. Using the demand function and the cost functions above, what is firm A's profit 4 function. = ( P XQA ) = TCA 1DO QA QA QB QA - 400QAUsing the profit function above and assuming that firm B produces Q, calculate what firm A's best response is to firm B's decision to produce Q- Note: Firm A's best response should be a function of QB To = 700-2 QA QB - 400 : 0 2 Q+ + 1 08 = 780- 450 201+ 28 - 380 45 20 n+ De = 300 x 45- 20 A + 28 = 1710 0 2 Q1 = 17, 100 - 08Using the demand function and the cost functions above, what is firm B's profit function TH = ( PX De ) - TCD 17- = 76023 - 2- 0, 28firm B's best response is to firm A's decision to produce QA. Note: Firm B's best response should be a function of QA TB = 700 - 45 Qx - 2 Qg - 260 = 0 45 45 QArt 2/5 QB = 780 - 260 Do + 7QB = 520 45 OF + 203 = 520 *45 QA + 2028 - 23, 40 0 2QB = 23400 - 2x QB = 11, 700 - 1 DX