The question below is a microeconomics questions at the college level.

Firm 1 and rm 2 are competing in the market for LCD monitors. In stage 1, rm 1 can invest in capital equipment It. Note that I: does not represent capacity: the xed cost 2 of k amount of capital equipment is fB, while the change in rm 1's marginal cost is a reduction of E. In stage 2, the rms compete in quantities. inverse demand is given by P = 50 ZQ. Firm 1's total cost is k k2 C1031) = Q1(2 _ 1') + E where ql is rm 1's output. Firm 2's cost is simpler: c2012) = Zqz. Find the subgame perfect equilibrium quanties. [10 marks]