1. Suppose that Samsung is considering entering the U. S. market for deep freezers. Sam sung's cost function for selling freezers in the U.S. is: 04.) = 10. + 0.025q This implies that their marg'nal cost is: M04913) = 10 + 0.05913. Suppose the U.S. market is monopolized by GE. G.E.'s cost function is lower than Samsung's due to reduced shipping. It is: CGE(QGE) = 00254313 Suppose the demand for freezers is g'ven by: P(Q) = 55 0.1Q. (a) Suppose GE is currently producing the monopoly level of freezers. How many freezers do they sell and what price do they sell at? (b) Could Samsung protably enter the U.S. market? (c) How many freezers would GE have to produce so that Samsung would not want to enter the market? You need to nd Samsung's best response function and compute what quantity of freezers GE would need to make so that when Samsung plays its best response it makes zero prots. ((1) Suppose Samsung and GE compete a la Cournot if Samsung enters the U.S. market. What would prots be? Would GE be better off committing to deter entry as in the previous part of this question or by accomodating entry and earning Cournot duopoly prots? 2. An industry consists of an incumbent (rm 1) and a potential entrant (rm 2). Each rm can produce output at a. constant marginal cost of $3 per unit. The incumbent has already incurred a. sunk cost F but the potential entrant must pay it if it enters. The inverse demand curve is P(Y) = 12 Y, where Y is total output. The rms compete in quanties. Firm 1 choose its quantity ql rst. Firm 2 observes ql and then decides whether or not to enter, the quantity it supplies is qz. (a) Suppose rm 2 enters. 1What is the best reply to rm 1's choice of ql. (b) Suppose F = 0. Determine the equilibrium prices, quantities, and prots. (c) How big would F need to be for rm 1 to protably deter rm 2's entry