Two Companies Are the Only Snowplow Merchants in a Small

Multiple Choice

Two companies are the only snowplow merchants in a small town. Inverse market demand curve is P = 100 - 10Q, where Q = q₁ + q₂ (Firm 1's output = q₁; Firm 2's output = q₂) . Each firm has marginal costs of $25. In the Nash equilibrium in this market, Firm 2 produces ____.

A) 5
B) 4
C) 2.5
D) 2