1. How much should a firm sell that has demand function Q = 400 - 10P and cost function C = 300 + 0.2Q^2 and is able to charge, for every unit, the full value of that unit to the customer? A. Q=25 B. Q=30 C. Q=75 D. Q=80

2. Bert's Balloons and Randy's Incredibly Fun Floating Stuff (RIFFS) are the only players in their industry, which has completely inelastic demand of 500 party balloons. Customers like the products of both firms equally and always buy from the cheaper of the two. If the prices are the same, customers will split equally between Bert's and RIFFS, so that each sells 250 units. Both firms have constant marginal costs of $1, and they compete by setting prices. Which is true about the Nash equilibrium of this game? A. One firm will set a price below marginal cost; they other firm will set a price above average cost. B. One firm will earn a profit greater than zero; the other firm will break even. C. Both firms will set prices equal to marginal cost. D. Both firms will earn a profit greater than zero.