Problem
Consider a market in which the market demand curve is given by P = 18 - X - Y, where X is Firm 1's output, and Y is Firm 2's output. Firm 1 has a marginal cost of 3, while Firm 2 has a marginal cost of 6.
a) Find the Cournot equilibrium outputs in this market. How much profit does each firm make?
b) Find the Stackelberg equilibrium in which Firm 1 acts as the leader. How much profit does each firm make?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.