Question 1 (20 marks) Consider an industry with two firms only (AA and BB), producing leather jackets. Their cost functions are: C1 = 30 q1 + 1.5 q12 C2 = 30 q2 + 1.5 q22 where q1 and q2 are outputs produced by AA and BB, respectively. The market demand for these jackets is represented by the inverse demand equation P = 300 - 3Q where Q = q1 + q2, total output; and P is the price of a leather jacket. a) If each firm acts to maximize its profits, taking its rival's output as given (i.e., the firms behave as Cournot oligopolists), what will be the equilibrium quantities selected by each firm? What are the profits of each firm? (4 Marks) b) If the two firms cooperate and behave like a monopolist, what will be the profit- maximizing choice of output, the industry price, the output, and the profit for each firm in this case? (4 Marks)