1.Suppose an industry has a duopoly structure. Firm 1 has a cost function given by: c₁(y₁) = (y₁)²for y₁ 0. Firm 2 has a cost function given by: c₂(y₂) = 26y₂for y₂ 0. Denoting total output produced in the industry by y = (y₁+ y₂), the inverse demand function for the good produced in the industry is given by: p=100-y,

(a) Calculate the output levels(y₁, y₂, y) that will be produced in a Cournot-Nash equilibrium and the price level in such an equilibrium.

(b) Suppose firm 1 acts as a Stackelberg leader and firm 2 is a follower. Calculate the output levels(y₁, y₂, y) and the price level.

(c) Calculate the total profits of this industry in (a) and (b), which one is bigger, Cournot or Stackelberg model?