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Consider a simultaneous move quantity-setting game with two firms facing a demand curve p = 100 - q. Both firms have marginal cost of 20. Suppose one firm maximizes profit and the other maximizes revenue, but both take into account the other firm's action while making its decision.
a. Find the quantities sold by each firm and the market price.
b. Who makes higher profit?
c. How would your answers change if each firm had a constant marginal cost of 60 (rather than 10)?
Use the following equations for demand and supply to solve for market equilibrium price and quantity: Demand: Qd = 100 - 4P Supply: Qs = 10 + 6P
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