1.Labradorite is a feldspar gemstone thought by some to reduce stress and anxiety (some of you may have some Labradorite next to you for this test!).The market demand for Labradorite is P = 100 - Q, where P equals market price and Q equals total quantity produced (in pounds) per year.Assume that Labradorite is a homogeneous product and that industry outcomes are predicted exactly by the Cournot model. Assume further that there are 3 firms in the industry with fixed costs per year of $450 for Firm 1, $375 for Firm 2 and $300 for Firm 3. (earn up to 3 points)

a.Solve for the Cournot solution (price and quantity for each firm) when MC=20 for all firms.

b.Solve for the Cournot solution (price and quantity for each firm) when MC=12 for all firms.