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1. Nito and Miguel are two individuals who one day discover a stream that flows wine...

1. Nito and Miguel are two individuals who one day discover a stream that flows wine instead of water. Nito and Miguel decide to bottle the wine and sell it. The marginal cost of bottling wine and the fixed cost to bottle wine cooler are both zero. The market demand for bottled wine is given as P = 90 - 0.25Q where Q is the total quantity of bottled wine produced and P is the market price of bottled wine.

a. If Nito and Miguel were to collude with one another and produce the profit-maximizing monopoly quantity of bottled wine cooler, how much-bottled wine cooler will they produce?

b. Given the output level in (a), what price will Nito and Miguel charge for bottled wine?

c. Suppose that Nito and Miguel act as Cournot duopolists, what are the reaction functions for them?

d. What level of output will Nito produce if Miguel and Nito act as Cournot duopolists?

e. What will be the price of wine be if Miguel and Nito act as Cournot duopolists?

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