(10 marks) Firm A and Firm B sell sparkling water and engage in Bertrand competition. They both have a constant marginal cost equal to 1 and zero xed costs. Total cost functions are therefore C7; ((13) = q; for i = A, B. For this exercise only, please assume that prices have to be in pennyunits. (a 5 marks) Suppose that consumers perceive the two brands of sparkling water as perfect substitutes; demand for rm 7) = A, B is then equal to 20 Pz' isz' Pj 2110; i if Pi = Pj Describe what happens in equilibrium. Can rms make positive prots in equilibrium