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In a homogenous good market two firms, A and B, are producing with the same technology....

In a homogenous good market two firms, A and B, are producing with the same technology. Firm i’ s total cost function is C(qi) = 10 + 20qi, where i= A,B. The inverse demand function for the good is given by P(qA+qB) = 150 – (qA+qB).

a) Assume that the firms choose simultaneously their quantities. Find the market price and determine firm’s profits and consumer surplus at that price.

b) If the two firms set simultaneously their prices, instead of their quantities, find the market price and determine firm’s profits and consumer surplus at that price

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