Question 1: (10 Marks) Assume that two firms compete in an industry and produce homogeneous goods. However, firm 1 enjoys a lower marginal cost of $15 as compared to firm 2 which has a cost of $30. Assume that the market demand is given by Q=120-P. a) Suppose both the firms compete in quantity and hence indulge in a Cournot competition. Find the output, price and profit for both the firms. (3 Marks) b) Now suppose both the firms form a cartel. How would your answer change compared to part (a)? (3 Marks) c) Suppose that the firms not compete on prices rather than quantities. What is the equilibrium under Bertrand competition? What is the output, price and profit for each firm? (3 Marks) d) Compare part (a) and part (c), what do you think is competing in quantity or price better for the firms? Why? (1 Mark)