Assume that two firms (n=2) compete by choosing output level…
Assume that two firms (n=2) compete by choosing output levels. Firm 1 produces q1 units of output and firm 2 produces q2 units of output. Total output in the market is given by Q = q1 + q2. Market demand is given by the function P(Q) = 48 – 0.1Q, and the firms have constant marginal (and average) costs of $20 for firm 1 and $25 for firm 2. What is the Cournot profit-maximizing output level for firm 1?