An industry contains two firms (A & B), firm A has marginal cost function MCA= 3qA, firm B has marginal cost function MCB= qB. The inverse demand function for the firms’ output is P = 80 – 0.5Q, where Q is the total output. Answer the following questions: 1.the Cournot response functions are:

qA=40 - 0.25qB ; And qB=20 - 0.125qA

qA=20 - 0.125qB ; And qB=40 - 0.25qA

qA= 22.85 - 0.14qB ; And qB=53.33 - 0.33qA

qA=53.33 - 0.33qB ; And qB=22.85 - 0.14qA

2.the Cournot outputs for the two firms (A & B) are:

qA=36.13 and qB=15.46

qA=15.46 and qB=36.13

qA=26.30 and qB=25.52

qA=25.52 and qB=26.30

3.if firm A is a leader firm, the Stackelberg solution will be:

qA=15.34 and qB=37.23

qA=16 and qB=36

qA=37.23 and qB=15.34

qA=36 and qB=16