The inverse market demand curve is P = 100 - 2Q, where Q (=q₁ +9₂) is the total output while Firm 1 and Firm 2 produce q₁ and 92, respectively. The output of the two firms is identical. Firm 1 and Firm 2 have the same cost structure: AC = MC = $12. a) If the firms are in Cournot competition, how much profit does each firm earn? b) Compare the profit obtained in (a) with the following two cases: (i) (ii) the two firms produce collusively and as Bertrand competitors.
