Suppose that inverse demand is given by p(Q) = a-bQ, where Q is total quantity supplied in the market. There are two firms in the market, each with a cost function of c(q) = cq
A) What is the profit function of each firm?
B) Asumming that the firms compete in quantities, solve for the best response functions and the resulting equilibrium levels of quantities
C) Compare the output and price to the competitive case and the monopoly outcome