Demand for a good can be characterized by P = 100 - Q. There are two firms: Firm 1 and Firm 2. They have identical cost functions.
TC1 =5+10q1 TC2 =5+10q2
1. Suppose that each firm make the output decision simultaneously (Cournot model). What are the equilibrium outputs by each firm, q1 and q2? What is the equilibrium price? What are each firm's profits?
2. Suppose that both firm collude with each other and share the profits equally (Monopoly model). What is the equilibrium output and price in this market? What are each firm's profits?