q1+q2 = 170+200 = 370
P = 94
SO, 94 = a - 370b ......(1)
as two Firms play cournot game
Then, π1 = (P-77)q1
= (a- bq1 - bq2-77)q1
= (a - 77 - bq2)q1 - bq12
FINDING best Response function
BR1 : dπ1/dq1 = 0
(a-77-bq2) = 2bq1
Then, (a-77-200b) = 340b
a- 77 = 540b .....(2)
Solving two equations
b = .1 , a= 131
.
π1= (P-MC1)*q1
= (94-77)*170
= 2890
π2 = (94-74)*200
= 20*200
= 4,000
.
CS = .5*(131-94)*(200+170)
= .5*37*370
= 6845
.
Social Surplus = CS + π
= 6845 + (4000+2890)
= 6845 + 6890
= 13,735
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