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Ten firms compete in a centralized market by choosing quantity produced (q1,......, q10) simultaneously. Aggregate production determines price, according to the following inverse demand function: p = 225- (q1 + ......+ q10) All firms face the same production costs: TCi = 5qi , i∈{1,.....10}

a. Graph firm 1's residual (inverse) demand function if each of the other nine firms have produced 10 units. Also graph the residual demand function if the other nine firms have produced 20 units each.

b. Define firm 1's maximization problem for each of the two cases of part (a). Obtain firm 1's production choice and the resulting market price for each of the two cases.

c. One of the two cases in part (b) is the Nash Equilibrium of the game. Determine which one it is and explain why.

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