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Question B in a marlcet that operates under guantitjl.r competition there are 2 rms (Coumot duopolv}. The inverse demand function is P = 240 2 D. The cost structure of rm 1 is given by Brigg = F1 + c1 of and that of rm 2 is given by Cgrggl = F; + c; g2. Prior to competing. the two rms can engage in research at levels {X1 , 12} respectivelyr in order to lower their marginal costs. As a result, marginal E0515 are {:1 = 40 Jr'r 5212 and 02 = 45' X2 131 11, where 51 = UTE and .32 = 0.525. Finallv, the research costs are F1 = 3 {x1 Fr? and F; = 4 {mfg If the two rms can coordinate their research efforts then the cooperative research levels {It , Jig} are closest to the following: Cl T for rm one and 5 for rm two. Cl 28 for rm one and 22 for rm two. Ct 14 for rm one and it] for rm two. {3. 19 for rm one and ED for rm two. Question 9 in a market that operates under quantity competition there are 2 rms [Coumol duopolv}. The inverse demand function is P = 240 2 D. The cost structure of rm 1 is given by; {31(ng = F; + c, of and that of rm 2 is given by Dgrggl = F; + c; g2. Prior to competing. the two rms can engage in research at levels {x1 , 12} respectively,r in order to lower their marginal costs. As a result, marginal costs are at: 4d Jr, 3212 and c2 = 4d 1'2 , x1, where ,6; = ore and ,32 = 0.525. Finallv, the research costs are F1 = 3 {x1 Fr? and F; = 4 {X2)2. if, instead, ,3; = [13 and ,8; = {1.4. then the Nash Equilibrium research levels are: C} Higher than the cooperative research levels for both rms. Cl Higher than cooperative research levels for rm 1 but lower for rm 2. Cl Lower than the cooperative research levels for both rms. Cl =Higher than cooperative research levels for rm 2 but lower for rm 1