Question: The market demand curve for a certain product is given by Q(p) = 120 - p, where p is the market price and Q denotes the quantity purchased by the consumers. Suppose that the product is produced with a single factor of production called labor, denoted by L. Assume that each firm i can hire any amount of labor at a fixed given wage rate, denoted by ω > 0. The production function of each firm i is given by qi = √Li, where Li is the amount of labor employed by firm i.
Now, suppose that there are two firms, whose output levels are denoted by q1 and q2. Solve for the competitive equilibrium price and quantities produced by each firm.