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SCENARIO 3: Consider an industry consisting of two firms producing an identical product. The inverse market...

SCENARIO 3: Consider an industry consisting of two firms producing an identical product. The inverse market demand equation is P = 100 − 2Q. The total cost equations for firms 1 and 2 are TC1 = 4Q1 and TC2 = 4Q2, respectively.

Refer to SCENARIO 3. Suppose that the two firms are Cournot rivals. The equilibrium level

of output for firm 1 is:

a. 8.

b. 16.

c. 24.

d. 32.

e. None of the above.

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