Consider Two Firms Competing to Sell a Homogeneous Product by Setting

Multiple Choice

Consider two firms competing to sell a homogeneous product by setting price.The inverse demand curve is given by P = 6 − Q.If each firm's cost function is C_i(Q_i) = 6 + 2Q_i,then each firm will symmetrically produce _________ units of output and earn ___________.

A) 4 units; profits of $6.
B) 2 units; profits of $2.
C) 4 units; losses of $2.
D) 2 units; losses of $6.