Question: Answer all question and explain why! QUESTION 12 (a) Consider an industry served by two firms, say firm 1 and firm 2, that sell identical

Answer all question and explain why!

QUESTION 12 (a) Consider an industry served by two firms, say firm 1 and firm 2, that sell identical goods. The firms set prices P, and P2 simultaneously to maximise profits and each firms has constant marginal costs of production. Suppose that marginal costs are C1 = C2 = c, 0 S c P2 D(P.) = 4 10 -1 if P1 = P2 20 - -1 if P1 Pi D(P, ) = 10 - -2 if P, = P2 4 20 - -2 if P2

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