Suppose that railways have a constant cost of $0.015 per tonne-km (the cost of moving one tonne of grain per km). There are only two railways in Canada, and the demand for rail is, Q D = 300 500p

(a) If railways competed on price (and railways offered a homogeneous product), what would be the equilibrium quantity, price, consumer surplus, and profits?

(b) If railways competed on quantity (and railways offered a homogeneous product), what would be the equilibrium quantity, price, consumer surplus, and profits?