Consider an industry with 4 firms with the same total cost function TC(q) = 20q. The demand function is p= 260 − 2Q. (a) Solve for Cournot equilibrium: how much each firm produces in equilibrium? What is an equilibrium price and profits? (b) What will be the profit of each firm if all the firms join the cartel? (c) If one of the firms wants to deviate from the cartel agreement, what output should it set? Calculate the profit of the cheating firm.

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