Final answer:
The equilibrium quantity for Firm 1 with a given subsidy can be found by equating its marginal revenue with its effective marginal cost of 25, considering the subsidy. Without detailed information on Firm 2's actions and the precise form of the MR curve, we cannot provide an exact quantity for Firm 1's output.
Step-by-step explanation:
The equilibrium quantity produced by Firm 1 in a duopoly situation with an inverse market demand of p=160-2q1-2q2 and constant marginal costs of 40, with the firm receiving a subsidy of 15 per unit, can be found using the concept of profit maximization where marginal cost (MC) equals marginal revenue (MR).
Given that both firms are identical in costs and decision-making, except for the subsidy received by Firm 1, we would need to equate Firm 1's marginal cost, effectively reduced by the subsidy to 25 (40-15), with its marginal revenue to find the equilibrium output. However, without more information regarding Firm 2's production decisions and the specifics of the demand curve affecting MR directly for both firms, we can only suggest that Firm 1 will produce up to the point where its MR equals its adjusted MC of 25. A full solution would require solving the Cournot duopoly model, taking into consideration the strategic interaction between Firm 1 and Firm 2.