The market demand equation is P = 40 - Q where Q = Q₁ + Q₂. Q₁ and Q₂ refer to the output level of your firm and your rival's firm respectively. Thus, the expanded demand equation is P = 40 - Q₁ - Q₂.

The marginal cost for your firm is 5, and 8 for your rival.

You are tasked, by your supervisor, with

a) identifying the output level your firm will set (Q₁) under the Cournot Model scenario.

b) explain why this outcome is better than that of the Stackelberg Model outcome if your firm moves second in a sequential game.