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Two firms operate in an oligopolistic market. The market demand function is given by p = 41 - 2q. The two firms have identical cost

Two firms operate in an oligopolistic market.

The market demand function is given by p = 41 - 2q.

The two firms have identical cost functions: TC = 37 - 9q + 3q 2 .

i) If the two firms collude, calculate the equilibrium market price (p) and output (q).

If both firms cheat and each increases its output by one unit, what will be the new equilibrium price?

ii) What is the impact of cheating on the profits of both firms?

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