(1) There are two firms A and B in the town, each having marginal cost equal to zero. The industry demand is P(Y)=120Y, where P is the price of the good and Y is the total output of the town. The demand schedule io liotad halnur a. Assume there are many firms in the town, what are competitive price and quantity? b. If the two firms cooperate as a monopolist and share the production equally, what are the price and quantity of the firms? c. If the two firms decide their quantities simultaneously, use the game-theoretical framework to analyze whether both firms have incentive to increase their quantities by 10 . If so, do they have incentive to increase the quantities further? d. Assume that firm A chooses quantity first, and after observing firm A's quantity, firm B chooses its quantity correspondingly. What are firm B's best responses given firm A's quantity is 50,60 and 70? What is firm A's best choice? e. What is the market outcome if two firms decide their prices simultaneously? (1) There are two firms A and B in the town, each having marginal cost equal to zero. The industry demand is P(Y)=120Y, where P is the price of the good and Y is the total output of the town. The demand schedule io liotad halnur a. Assume there are many firms in the town, what are competitive price and quantity? b. If the two firms cooperate as a monopolist and share the production equally, what are the price and quantity of the firms? c. If the two firms decide their quantities simultaneously, use the game-theoretical framework to analyze whether both firms have incentive to increase their quantities by 10 . If so, do they have incentive to increase the quantities further? d. Assume that firm A chooses quantity first, and after observing firm A's quantity, firm B chooses its quantity correspondingly. What are firm B's best responses given firm A's quantity is 50,60 and 70? What is firm A's best choice? e. What is the market outcome if two firms decide their prices simultaneously