Question: three 3 identical firms produce widgets each firm faces a...
Three (3) identical firms produce widgets. Each firm faces a constant marginal cost of
$10 per widget, and has fixed costs of $15,000. The firms compete by selecting quantities (Cournot Competition). Inverse demand in the market is given by the equation,
P = 50 - (Q/100)
where P represents the market price and Q is the total quantity produced by the three firms.
Question: Derive the best response function for the typical firm.