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1. ( 25 points) An industry consists of two Cournot firms selling a homogeneous product with a market demand curve given by \( P=100-q_{1}-q_{2} \). Each firm has a marginal cost of 10 TL per unit. a) Find the Cournot equilibrium quantities and price. b) Find the quantities and price that would prevail if the firms acted "as if" they were a monopolist (i.e., find the collusive outcome). c) Suppose Firms 1 and 2 sign the following contract. Firm 1 agrees to pay Firm 2 an amount equal to \( K \) liras for every unit of output it (Firm 1) produces. Symmetrically, Firm 2 agrees to pay Firm 1 an amount \( K \) liras for every unit of output it (Firm 2 ) produces. The payments are justified to the government as a cross licensing agreement whereby Firm 1 pays a royalty for the use of a patent developed by Firm 2, and similarly, Firm 2 pays a royalty for the use of a patent developed by Firm 1. What value of \( K \) results in the firms achieving the collusive outcome as a Cournot equilibrium? d) Draw a picture involving reaction functions that shows what is going on in this situation.

          1. ( 25 points) An industry consists of two Cournot firms selling a homogeneous product with a market demand curve given by \( P=100-q_{1}-q_{2} \). Each firm has a marginal cost of 10 TL per unit.
a) Find the Cournot equilibrium quantities and price.
b) Find the quantities and price that would prevail if the firms acted "as if" they were a monopolist (i.e., find the collusive outcome).
c) Suppose Firms 1 and 2 sign the following contract. Firm 1 agrees to pay Firm 2 an amount equal to \( K \) liras for every unit of output it (Firm 1) produces. Symmetrically, Firm 2 agrees to pay Firm 1 an amount \( K \) liras for every unit of output it (Firm 2 ) produces. The payments are justified to the government as a cross licensing agreement whereby Firm 1 pays a royalty for the use of a patent developed by Firm 2, and similarly, Firm 2 pays a royalty for the use of a patent developed by Firm 1. What value of \( K \) results in the firms achieving the collusive outcome as a Cournot equilibrium?
d) Draw a picture involving reaction functions that shows what is going on in this situation.

1. ( 25 points) An industry consists of two Cournot firms selling a homogeneous product with a market demand curve given by P=100-q1-q2. Each firm has a marginal cost of 10 TL per unit.
a) Find the Cournot equilibrium quantities and price.
b) Find the quantities and price that would prevail if the firms acted "as if" they were a monopolist (i.e., find the collusive outcome).
c) Suppose Firms 1 and 2 sign the following contract. Firm 1 agrees to pay Firm 2 an amount equal to K liras for every unit of output it (Firm 1) produces. Symmetrically, Firm 2 agrees to pay Firm 1 an amount K liras for every unit of output it (Firm 2 ) produces. The payments are justified to the government as a cross licensing agreement whereby Firm 1 pays a royalty for the use of a patent developed by Firm 2, and similarly, Firm 2 pays a royalty for the use of a patent developed by Firm 1. What value of K results in the firms achieving the collusive outcome as a Cournot equilibrium?
d) Draw a picture involving reaction functions that shows what is going on in this situation.

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