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Suppose that market ( inverse) demand is linear and given by p(y) = 120-y Two firms...

Suppose that market ( inverse) demand is linear and given by p(y) = 120-y

Two firms compete in this market. Firm 1 has cost function ca(y) = 30y while its competitor, Firm B, has cost cb(y) = y2

i. Suppose that firm 1 is acting alone and acting as a monopolist. Find the market price and quantity sold assuring firm 1 maximizes its profits.

ii. Suppose that both firms are Cournot competitors. Find the quantity produced by each firm and the market price.

iii. Now assume they are Stackelberg competitors. Firm A is the leader and sets its quantity firm first. What quantity is produced by each firm and the market price?

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