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8) Suppose that two firms, Firm A and Firm B, are producing identical products in an isolated market. The demand for the products in the

8) Suppose that two firms, Firm A and Firm B, are producing identical products in an isolated market. The demand for the products in the marketis:

= . Each firm has a cost function = + .

a. Determine the equilibrium quantities of each firm if firm A is the Stackelberg leader.

b. How does a decrease in fixed cost, c, affect the equilibrium quantities of the firms? Explain your answer briefly.

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