6.1. the inverse market demand curve for a duopoly market is p = 14 - q = 14 - q1 - q2, where q is the market output, and q1 and q2 are the outputs of firms 1 and 2 respectively. each firm has a constant marginal cost of 2 and a fixed cost of 4. consequently, the nash-cournot best-response curve for firm 1 is q1 = 6 - q2/2. a. create a spreadsheet with columns titled q2, br1, q, p, and profit. in the first column, list possible quantities for firm 2, q2, ranging from 0 to 12 in increments of 2. the column headed br1 shows the profit-maximizing output (best response) for firm 1 given firm 2’s output in the first column. the q column sums the values in the q2 and br1 columns. the p column lists the price that corresponds to q. the profit 1 column shows the profit of firm 1, taking account of its marginal and fixed costs. after filling in the spreadsheet, use the scatterplot option in excel to draw the best-response curve for firm 1. b. what is the monopoly output and profit for firm 1

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.