(1) Suppose that two identical firms produce widgets and that they are the only firms in the market. Their costs are given by C, = 60Q, and C, = 60Q,, where Q, is the output of Firm 1 and Q, is the output of Firm 2. Price is determined by the following demand curve: P 300 – Q Where Q=Q,+Q. a. Find the Cournot-Nash equilibrium. Calculate the profit of each firm at this equilibrium. b. Suppose the two firms form a cartel to maximize joint profits. How many widgets will be produced? Calculate each firm's profit.

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