Two firms operate in a single good market and produce quantities q1 and q2 respectively. They face the market demand curve P = 12Q. Firms 1 has zero fixed costs and variable costs equal to 1. Thus it's total cost function is q1. Firm 2 has fixed cost equal to zero and variable cost equal to 2, hence, its total cost function is 2q2. Answer the following. a. What quantities will each produce in equilibrium? Hint: since the assumptions of the problem are the same as those under Cournot duopoly, you can assume that the firms are Cournot duopolists. b. Suppose that it is general knowledge that Firm 2's capacity is 2 units. This means that 0 q2 2. Then what quantities will the two firms choose in equilibrium? Hint: given your solution in part a., you know that you can't have an interior solution, since your answer in part a. for q2 is greater than q2 = 2. So, try setting q2 = 2. Now you just need to find q1.