3. Remember the Cournot example presented in class. Suppose there are only 2 firms in the market, i = 1, 2, and Y = y1 + y2. The inverse demand curve is given by P(Y) = 100 - 2Y, and the total cost function for any firm in the industry is given by C(yi) = 4 yi. 3 a. If the firms decide to collude, what will be the industry output and the market price? b. Suppose both of the colluding firms are producing the outputs you found in part a. (y1*and y2*). If one of the colluding firms (Firm 1) assumes that the other firm (Firm 2) would not react to a change in industry output, what would happen to Firm 1's profits if it increases its output above y1*?

3. Remember the Cournot example presented in class. Suppose there are only 2 firms in the market, i = 1, 2, and Y = y1 + y2. The inverse demand curve is given by P(Y) = 100 - 2Y, and the total cost function for any firm in the industry is given by C(yi) = 4 yi. 2. a. If the firms decide to collude, what will be the industry output and the market price? b. Suppose both of the colluding firms are producing the outputs you found in part a. (y1*and y2*). If one of the colluding firms (Firm 1) assumes that the other firm (Firm 2) would not react to a change in industry output, what would happen to Firm 1's profits if it increases its output above y1*