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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. Firm 1 will earn a

profit of:

a. $512.

b. $732.

c. $836.

d. $1,014.

e. None of the above.

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