1. Imagine in the near future that you work for the Federal Trade Commission as an analyst. Your role requires you to analyze the following scenarios for a market made up of two firms that compete by simultaneously setting quantities. Firm 1's quantity is denoted by (11 and the cost of production in its factory is summarized by a cost function Elm} = 24:11. Firm 2's quantity is denoted by q: and the cost of production in its factory is given by C(q = 50:12. The market price is given by the inverse demand equation: F = 2400 - 20., where (1 denotes the market quantity the output from the two rm, Lo. (1 = q1 + q:- 3. Find each rm's best response function and graph their best response functions. b. What is the Nash equilibrium market price, level of output for each rm, and market quantity? c. 1What would be the impact on the market if rm 1 was forced to exit the market leaving rm 2 as a monopolist. Using the rm's best response function, find the quantity it would produce. Given the lm's output choice. nd the market price that would result. How much less output is rm 2 producing than it would produce if it was producing the total surplus maximizing (efcient) amount? d. Now assume that, rather than one rm exiting. the rms have successfully lobbied for an antitrust law exemption and are free to act as a cartel. Assuming the rms have agreed to split the total prots evenly. how should they distribute their production of output across their factories? What level of output would maximize their Joint prots, at what price would their output sell, and what prots would each earn