Consider a two-firms Cournot model with constant returns to scale. Assume also that the inverse demand function is P= 100 – 20. with marginal cost equal to 20for both firms, where Q = 41+4. a) Derive the Nash equilibrium of this model and compare it with Monopoly and Perfect competition b) How do equilibrium outputs and profits vary when firml’s cost changes. Draw a picture of this outcome c) Calculate Stackleberg equilibrium. Draw a picture of this outcome using best- response functions and isoprofit contours

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