Question 1 Suppose that two rms compete in quantities (Cournot) in a market in which demand is described by P = 260 262. Each rm incurs no xed cost but has a marginal cost of 20. a. 'What is the oneperiod Nash equilibriiml market price? What is the output and prot of each rm in this equilibrilml? b. 1What is the output of each rm if they collude to produce the monop o1}.r output? What prot does each rm earn with such collusion? c. If one rm decides to cheat on the collusion, assuming that the other rm will continue to produce its half of the monopoly output, how much will the cheating rm produce? What will be the industrj.r price and the deviating rm's prot in this case? d. Suppose that the market game described above is now repeated indef initely. Show that the collusive agreement can be maintained so long as the probabilityadjusted discount factor is ,05 }- 0.53