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Suppose two firms are engaged in Cournot competition. The firms are identical, produce homogeneous products and have marginal costs = $0 and no fixed cost.
The firms face the following inverse demand curve:
p = 300 - (q1 + q2). The best response functions for the two firms are as follows:
q1 = 150 - 0.5 * q2
q2 = 150 - 0.5 * q1
What is the total quantity produced in equilibrium?
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