answer the attached question below

sprin... 4. Traffic. There are two firms, 2 - 1, 2, and these two firms make two different products, product 1 and product 2. Each product has its own demand curve. For simplicity, we will assume the demand curves are identical: P1 = A- Bq1 and P2 - A- Bq2 where qi is the quantity of product i manufactured by firm z. (q; is firm i's choice variable.) These two firms are both at the end of the same road. Unfortunately, it means that when firm 1 wants to ship product, if firm 2 is on the road already, it takes longer! We represent this as follows. Let c1 be the marginal cost of Firm 1's production (so total cost is q1 . c1). Then we assume the Firm 1's marginal cost cj is in fact a function of 92, called c1 (q2) : A c1 (92) = 2q2 And it's also symmetric, so c2 (91 ) = 2q1. (a) (5 points) Above, I describe the traffic problem, and then say we represent the traffic problem through this cost function. Explain how the verbally described traffic problem is represented in this cost function. Does it make sense? Why or why not? (b) (7 points) What is the best response function of Firm 1? Of Firm 2? (c) (10 points) What is the Nash Equilibrium level of production (qi , q2 )? Is it symmetric? (d) (10 points) Suppose that firm 1 and firm 2 are bought by the same guy, Mr. 3. Mr. 3 wants to maximize over all profit. Find the corresponding level of production (qi, q2 ). (e) (7 points) Interpret your previous answer. Do the firms produce more or less when they are owned by the same person? Why? Explain