1. (15 marks) Suppose in a duopoly market there are two firms, 1 and 2, each with a cost function

given as TC1 = 10Q1 and TC2 = 10Q2. The inverse demand in the market is P = 100 - 2(Q1 + Q2).

The firms are homogeneous product duopoly.

a. Suppose the market is characterized by Cournot oligopoly. Calculate each firm's profitmaximizing output, price, and profit. Be sure to show all steps needed for this question.

b. Now suppose the market is characterized by Stackelberg oligopoly. Calculate each firm's

profit-maximizing output, price, and profit.

c. Now suppose each firm colludes in its price and output decision. Calculate each firm's profit

maximizing output, price and profit.