Question: 9. Consider a market in which there are two differentiated products. We will be considering two cases: one in which there are two single product

 9. Consider a market in which there are two differentiated products.We will be considering two cases: one in which there are two

single product firms choos- ing price simultaneously and indepen dently and monopoly.Consider the de- mand equations qi(PI, p2) = 9600 - 10p1 +

9. Consider a market in which there are two differentiated products. We will be considering two cases: one in which there are two single product firms choos- ing price simultaneously and indepen dently and monopoly. Consider the de- mand equations qi(PI, p2) = 9600 - 10p1 + mp2. (2) (92(p1,p2) = 9600 + mp1 - 10p2, where m is a number that will be var- ied in the questions below. Suppose that the marginal cost for each product equals 480 and that there are no fixed costs. For each of the values m = 0,4,8 answer the following questions. (a) Compute equilibrium prices, vol- umes, and profit if there is a monopoly.(b) Compute equilibrium prices, vol umes, and prot if there is a duopoly. (c) Compute deadweight loss if there is a merger. (d) Compute the diversion ratios. (e) Compute the own and cross price elasticities at 131 = p2 = 1000. (f) Compute the postmerger marginal cost for which the merger would not lead to higher prices

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