Consider a duopoly facing an (inverse) market demand of p = 300 − 3Q. Firms produce a homogenous good at a constant marginal cost MC = 100.
a) Find the best response (or reaction function) of each firm. Illustrate the two curves on a graph.
b) Find the Cournot Equilibrium quantity per firm and point it on your graph.
c) Compute the equilibrium market output. Is that economically efficient? Explain.