2. Entry and Cournot competition (40 points): There is free entry for firms on the market for cigaretts, competing with each other by setting quantities. Assume that market demand is P(Q) = 10-Q and Q=q; and that all firms have costs C(qi) = qi+f. = a) What are the optimal quantities supplied by the firms if fixed costs are either f = 4 or f = 1? = b) What is the free-entry equilibrium number of firms if fixed costs are either f = 4 or f = 1? c) What is the total surplus under free entry for the two values of f? d) Compare the efficiency of the Cournot free-entry equilibrium with monopoly for f = 1 and f=4. Discuss your result