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Bartels and Jaymes are two individuals who one day discover a stream that flows wine cooler instead of water. Bartels and Jaymes decide to bottle the wine cooler and sell it. The marginal cost of bottling wine cooler and the fixed cost to bottle wine cooler are both zero. The market demand for bottled wine cooler is given as: P = 100 - 0.25Q where Q is the total quantity of bottled wine cooler produced and P is the market price of bottled wine cooler.
a. Suppose that Bartels and Jaymes act as Cournot duopolists, what are the reaction functions for Bartels and for Jaymes?
b. In the long run, what level of output will Bartels produce if Bartels and Jaymes act as Cournot duopolists?
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