An Industry Consists of Two Firms Producing Identical Goods

Multiple Choice

An industry consists of two firms producing identical goods. The market demand for the combined output of both firms is (Q_A + Q_B) = 100 !0.2P. The total cost function of each firm is TC_i = 100 + 200Q_i, where i = A,B. Firm B's best-response function is:

A) Q_B = 30 !0.5Q_A.
B) Q_B = 25 !0.3Q_A.
C) Q_B = 25 !0.2Q_A.
D) Q_B = 50 !0.25Q_A.
E) None of the above."