Suppose there are two firms, boors and cudweiser, each selling identical-tasting nonalcoholic beer. consumers of this beer have no brand loyalty so market demand can be expressed as p = 5 − .001(qb + qc). boors' marginal revenue function can be written mr = 5 − .001(2qb + qc) and while cudweiser's marginal revenue function can be written mr = 5 − .001(qb + 2qc). boors operates with out-of-date technology and has constant cost of mc = ac = $2 per unit, whereas cudweiser has mc = ac = $1 per unit. assuming the firms behave as cournot competitors, boor's best-response function is

The best response function of Boor is given by

Explanation: Best response function of Boor will show the profit maximising quantity Boor will choose to produce for each quantity produced by Cudweiser. This means that it shows the best profitable quantity that Boor can produce given the quantity produced by Cudweiser.

So, the best response function can be derived by the profit maximising condition for Boor, which is

Thus, the best response function of Boor is given by

-$4,000 unfavourable

Explanation:

The sales volume variance is calculated as ;

= (Actual sales units - Estimated sales units) × Estimated selling price.

Given that;

Actual sales units = 8,000

Estimated sales units = 10,000 units

Estimates selling price = $2 per unit

Therefore,

Sales volume variance = (8,000 - 10,000) × $2

Sales volume variance = -$4,000 unfavourable