Consider a Cournot Duopoly with the Following Inverse Demand Function

Multiple Choice

Consider a Cournot duopoly with the following inverse demand function: P = 10 - 0.5Q₁ - 0.5Q₂.The firms' marginal cost are identical and given by MC_i(Q_i) = 3.Based on this information firm 1 and 2's reaction functions are

A) r₁(Q₂) = 7 - 0.5Q₁ and r₂(Q₁) = 7 - 0.5Q₂.
B) r₁(Q₂) = 14 - 0.25Q₂ and r₁(Q₂) = 14 - 0.25Q₁.
C) Q₁ = 7 - 0.5Q₂ and Q₂ = 7 - 0.5Q₁.
D) Q₁ = 14 - 0.25Q₂ and Q₂ = 14 - 0.25Q₁.