Part A. Cournot Competition on Quantity Suppose there are two firms producing an identical good with inverse market demand given by P = 1200 - Q, where Q is the total quantity produced by firm 1 and firm 2. Each firm has zero fixed costs and constant marginal costs of $300. a. Suppose the firms behave as Cournot competitors. What quantity will each produce? What price will they receive? How much profit does each firm earn? b. Now suppose the firms are in Stackelberg competition. Firm 2 observes Firm I's output level before choosing its desired output level. What quantity will each produce? What price will they receive? How much profit does each firm earn? Is there first-mover advantage? c. Now suppose instead that the firms behave as Bertrand competitors. What quantity will be produced? What will be the equilibrium price? How much profit does each firm earn? d. Now suppose that the two firms cooperate and behave as a single monopolist, while splitting market demand equally. What quantity will each produce? What price will they receive? How much profit does each firm earn? Does cooperative behavior make the firms better off? e. What are the major obstacles to cooperative pricing? f. Suppose a third firm entered the market. How do you expect that would affect the market price and profitability of individual firms for the settings in part a, b, and c? Discuss the general direction, but specific answers are not required. g. Consider three possible situations: The firms engage in Cournot competition The firms collude and act as a monopolist The firms engage in perfect competition Rank the quantities associated with three market structures in equilibrium. Each of these situations will have a price associated with it in equilibrium. Also, rank these prices in order from highest to lowest