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1. (25) Suppose that two firms compete in a market with identical goods. They compete in price (Bertrand): because goods are identical, whichever firm chooses the lowest price gets the entire market. If a firm sells at a price P, they sell at a quantity set by the demand function Q =4 - P,. Firms face a marginal cost of 2 per unit produced. (a) Write down a strategy for each player. (5) (b) Solve for the Nash equilibrium. (5)For the next two questions, suppose that now firms compete in quantity. Quantity is determined by the inverse demand function P =4-Q1-Q, and continue facing a marginal cost of 2 per unit produced. (c) Write down a strategy for each player. (5) (d) Solve for the Nash equilibrium