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5. Suppose there are two rms in a market. Each has marginal cost = 0. The inverse demand curve is given by P = 1000

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5. Suppose there are two rms in a market. Each has marginal cost = 0. The inverse demand curve is given by P = 1000 - 250, where Q = q1 + (12. Firm 1, the "leader" chooses its output level rst. After it makes its choice, rm 2 then decides how much output to produce. A. What is rm 2's reaction function? 0. How much output will rm 1 choose? C. How much output will rm 2 choose? D. What will be the market price? E. If the rms chose output simultaneously, what would the market price he? F. What is the total surplus in the market (consumer and producer) whEn the rms choose simultaneous- ly? G. What is the total surplus in the market when rm 1 chooses rst and then rm 2 chooses

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