Microeconomics and business strategy

Question 1 [20 points] Two firms: a and b: compete in a market to sell homogeneous products with inverse demand function P = 400 2Q where C! : Q3 + Qb. Firm a has the cost function Ca : 'I +156a and rm b has the cost function Cb : 100 + 15%,. Use this information to compare the output levels, price and profits in settings characterized by the following markets: i. lCournot n. Stackeloerg iii. Bertrand iv. Collusion