Question: Two firms, the Alliance Company and the Bangor Corporation, produce vision systems. The demand curve for vision systems is

P = 200,000 – 6(Q₁ + Q₂)

where P is the price (in dollars) of a vision system, Q₁ is the number of vision systems produced and sold per month by Alliance, and Q₂ is the number of vision systems produced and sold per month by Bangor. Alliance’s total cost (in dollars) is

TC₁ = 8000Q₁

Bangor’s total cost (in dollars) is

TC₂ = 12000Q₂

a. If each of these two firms sets its own output level to maximize its profits, assuming that the other firm holds constant its output level, what is the equilibrium price?

b. What is the output of each firm?

c. What is the profit of each firm?