Gobabis, asmalltownin Namibiahas twoService StationsEngine(A)andShell(B), selling identical petrol.The inverse demand function for petrol inGobabisis given byP = 30 - 3Q.where P is the market price and Q = QA+ QBwhere QAand QBare the quantities sold byEngineandShell respectively.Unit costs areN$15 perliterforA andN$10perliterforB.

a)Assuming a perfectly competitive outcome, calculate the profit for both Engine and Shell. [10]

b)Briefly discuss whether theEngine and Shellwould be more likely to compete on price or on quantity.[5]