Q1 [MONOPOLY, Couawor AND STAGKELBERG'S MoDEL oe OLIGUPULY] The market demand curve in a commodity chemical industry is given by Q = 4013213, where Q is the market demand per month and P is the market price in dollars. (a) [5 marks] Suppose there is only one rm in the market. The marginal cost of the rm is $83 per unit. Calculate the monopoly price and quantity. Show the equilibrium using a graph. Now supplle there are two rms in this industry, Firm 1 and Firm 2. Each rm has an identical constant marginal cost of $80 per unit. Assume the competition in this market is described by the Gourmet model. (b) Find Firm 1 and Firm 2's best-response functions and draw a graph to show them simultaneously. (c) What is the Nash Equilibrium price and quantity? Now suppose that the rms are playing the Stackelberg game instead. Firm 1 is the Stackelberg leader and Firm 2 is the Stackelberg follower. (d) What is the Stackelberg equilibrium price and quantity of each rm? (e) Explain the dilference between the Stackelberg game and Cournot game. (f) Calculate and compare the welfare loss [DWL] of the economy under the Monopoly, Cournot and Stackelberg equilibrium