Two dairy farmers produce milk for a local town with local milk demand given by (P denotes price measured in Rands, Q denotes the quantity measured in liters). Both farmers have the same cost function given by (where denotes output). (a) Determine the reaction function of each farmer. [8] (b) Find the Cournot-Nash equilibrium. [2] (c) Calculate profits for each farmer [2] (d) Suppose that both farmers decide to form a cartel, determine profits for each farmer under the cartel

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Two dairy farmers produce milk for a local town with local milk demand
given by (P denotes price measured in Rands, Q denotes the quantity
measured in liters). Both farmers have the same cost function given by
(where denotes output). (a) Determine the reaction function of each
farmer. [8] (b) Find the Cournot-Nash equilibrium. [2] (c) Calculate
profits for each farmer [2] (d) Suppose that both farmers decide to
form a cartel, determine profits for each farmer under the cartel

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