Please Answer all parts in full sentences:

6. [22] Suppose that demand for "Zoom bookshelves" (these are collections of books that make the user appear well-read and knowledgeable) is given by Q = 280 - p. There are only two firms that produce this coveted product, they both have cost function C(q; ) = 4q,, where j = 1,2 denotes the identity of each firm, respectively. Total production of "Zoom bookshelves" is equal to the output of the two firms. a. [12] Suppose that the firms compete on quantities and that firm 1 enters the market first. i. [4] Find the Nash equilibrium output of each firm. ii. [4] Explain why these output choices are a Nash equilibrium. 4 of 5 [Total pts = 85] ZARIDIS of Business & Economics ili. [4] How much profit does each firm make? How do you think these profit levels compare with what they would be under simultaneous quantity setting? b. [10] Suppose instead that the two firms are competing strategically on price instead of quantity and they are making decisions simultaneously. i. [4] What is the demand function for firm 2? How does this compare with the demand function for firm 1? ii. [4] What prices will firm 1 and 2 set in equilibrium? Explain why this is a Nash equilibrium. iii. [2] How many "Zoom bookshelves" will each vendor sell in equilibrium