Final answer:
The Nash equilibrium price for the two firms is $20.5.
Step-by-step explanation:
In this market with two firms, the demand function is given by q = 40 - p and the marginal cost is 1. To find the Nash equilibrium price for the two firms, we need to determine the level of output where the marginal revenue (MR) equals the marginal cost (MC).
The marginal revenue can be found by taking the derivative of the demand function with respect to quantity (q), which is MR = 40 - 2q. Setting MR equal to MC, we get 40 - 2q = 1.
Solving this equation, we find that q = 19.5. Substituting this value back into the demand function, we can find the price (p) that corresponds to this quantity: p = 40 - 19.5 = 20.5.
Therefore, the Nash equilibrium price for the two firms is $20.5.