allected firms ability to engage in strategic behavior ? Discuss. (o marks) 6. Consider a market with two firms. Call them firm 1 and firm 2. The demand function describing the market is P = 216 - 0.4Q. Firms are initially identical, with the cost function C(q) = 140 + 40q. a. Calculate the total profits in the market. Under what conditions, the two firms may succeed to collude? How much would each firm earn if they could collude? b. Suppose firm 1 innovates and reduces its marginal cost to f20. How will this affect the firms' profits? How may the innovation shape market competition? Will the risk of price war increase or decrease? When? c. Suppose technological advancements reduce the initial costs of entry into the market. How will this affect the firms' ability to exercise non-uniform pricing? Will the firms be able to engage in price discrimination, 2 part-pricing, or product bundling? Explain