Consider two identical firms (no. 1 and no. 2) that face a linear market demand curve. Each firm has a marginal cost of zero and the two firms together face demand:
P = 50 - 0.5Q, where Q = Q1 + Q2.
a. Find the Cournot equilibrium Q and P for each firm. Calculate the results rounded to the second digit after the decimal point
b. Find the equilibrium Q and P for each firm assuming that the firms collude and share the profit equally.
