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There are 2 farmers in a town producing millk. Both decide simultaneously how much to produce....

There are 2 farmers in a town producing millk. Both decide simultaneously how much to produce. Inverse demand is p(q)=2000-2q. Both farmers face the same cost function: C(q)=80000+560q.
a) Claculate and draw the reaction functions of both farmers.
b) Find the Cournot equilibrium and farmers’ profits.
c) Compare the total welfare in the Cournot equilibrium with the total welfare
created if both farmers form a cartel. Discuss the result.

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