please not write by hand

3. Suppose an industry consists of two competitors. Firm 1 makes and sells product 1 and rm 2 makes and sells product 2'. The demand for each product is: q1 = 100 20101 + 10332 5133 {32 = 100 + 10171 20102 5103 93 = 100 + 5101+ 5:02 20103 Pre-merger market prices of p1 = $10.17, 102 = $10.17 and p3 = $9.04 are observed. (a) Assume static price competition and constant marginal costs. Use the Nash equi- librium conditions to determine what each rm's marginal cost must be given demand and observed prices. (b) Firms 1 and 2 propose merging. Using the hypothetical monopolist test, deter- mine the smallest relevant antitrust market. (c) Suppose product three has similar characteristics to product 2. For example, suppose products 2 and 3 are pale ale beers and product 1 is a lager. Would you argue that product 3 is in a separate relevant market or not? Explain