Consider a duopoly formed by firms 1 and 2, producing a homogeneous good.

The demand for this market is represented by the following function:

P = 30 - Q

And the cost of both firms is given by

C (q_i) = q_i, i = 1,2.

(i)Assume that firms compete in quantity.Calculate the Cournot balance: quantity produced and profit for each firm and the market price.

In the following items, firms compete on price.

(ii)Calculate the balance of Bertrand: quantity produced and profit of each firm and the market price.