3. Exercise 12.3 Assume that two companies (A and E] are duopolists who produce identical products. Demand for the products is given by the Following linear demand function: P=m_QAQB where Q3 and Q3 are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are To; = 1,500+55QA + of m3 = 1,200 + 2093+ 2.932 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits {sum of Firm A and Firm B prots). In such a caser lCompany.r A will produce |:| units and sell at . Similarly, Company.r B will produce |:| units and sell at . At the optimum output levelsr Company A earns total prots of and Company:I El earns total prots of . Therefore, the total industryI profits are H J-J At the optimum output levelsr the marginal cost of IIIompanyr A is and the marginal cost of Company Bis