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1. Consider a two-firm oligopoly facing a market inverse demand curve of P = 100 – 2(q1 + q2), where q1 is the output of Firm 1 and q2is the output of Firm 2. Firm 1's marginal cost is constant at $12, while Firm 2's marginal cost is constant at $20. In Cournot equilibrium, how much output does each firm produce?
A) q1=16, q2=12
B) q1=18; q2=8
C) q1=14 ; q2=11;
D) q1=20; q2=14
2. Monopolistic competition is different from monopoly because firms:
A. have some power to set prices.
B. have a downward-sloping demand curve.
C. have a downward-sloping marginal revenue curve.
D. face some competition.
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