1. Consider two firms under the Cournot's behavioral assumption.

The demand curve for there is given as P= 100-2Q, where Q=Q+Q2. The firm's cost function are TC-50-200 and

TC2=45+24Q2. Determine

a. The reaction function of the two firms

b. Each firms equilibrium output

c. The grand equilibrium quantity

d. Equilibrium price

e. Each firm's equilibrium profit

f. Calculate cartel profit with collusion and non-collusion

g. Compare cartel profit under collusion and non-collusion

h. Assume that firm 1 is leader and firm 2 is follower, determine the stackelberg equilibrium

i. Calculate the profit earned by the two firms at the stackelberg equilibrium