Oligopoly#1. Consider two firms facing the demand curve P =50-5Q, where Q=Q1+Q2. The firms 'cost functions are Ci(Q1)=20+10Q1 and Cz(Q2)=10+12Qz. a. Suppose both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? How would your answer change if the firms have not yet entered the industry? b. What is each firm's equilibrium output and profit if they behave noncooperatively? Use the Cournot model. Draw the firms' reaction curves and show the equilibrium. c. How much should Firm 1 be willing to pay to purchase Firm 2 if collusion is illegal, but a takeover is not? d. Returning to the duopoly of part b, suppose Firm I abides by the agreement, but Firm 2 cheats by increasing production. How many widgets will Firm 2 produce? What will be each firm's profits