Question

PART TWO (10 points each, 40 points total). Answe r the following problems in the space provided Please show your work in an organized way with clearly labeled graphs if you choose to use any. 11. Two identical firms are engaged in Cournot competition, with cost functions TCA(QA) 150 Qa and TCB(Qs) -150 QB. The market demand is given by P 1050-20. a) Find the Cournot-Nash equilibrium and profit for each firm. b) Find the Stackelberg equilibrium if A leads and B responds. c) What are the prices, quantities, and profits for the firms if they decide to collude and share profits equally? d) Graph and label the reaction curves for the two firms and the collusion curve on the same graph in the Qa, QB space. Identify the equilibria from parts a-c. e) Show the equilibria in the previous parts on the inverse demand function. Calculate and identify consumer surplus and deadweight loss in each equilibrium.