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4. There are two firms (Firm 1 and Firm 2) compete in a market for instant...

4. There are two firms (Firm 1 and Firm 2) compete in a market for instant noodles which are considered to be identical by their consumers. Suppose each firm has the following cost function. ?(??) = 120??; where ? = 1 & 2 The total market demand for instant noodles is represented by following demand function ? = 600 – ?; where ? = ?1 + ?2 Answer the following questions.

a. If both firms maximize their profit by considering that the output produced by their opponent as given simultaneously, calculate:

(i) Total output produced by each firm.

(ii) The price of instant noodles in the market.

b. If Firm 1 is the first mover in setting its output produced, then followed by Firm 2, calculate:

(i) Total output produced by Firm 1 and Firm 2.

(ii) The price of instant noodles in the market.

c. If Firm 1 and Firm 2 collude, what are the price and the total number of instant noodles produced in the industry.

d. If both firms are under a perfectly competitive market, what are the price and the total number of instant noodles produced in the industry.

e. Compare and discuss the prices and total output produced by the firms in the different scenarios: monopoly, Cournot duopoly, Stackelberg oligopoly, and perfectly competitive markets.

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