Assume downward sloping demand for Toronto-focused e-magazines. There are only twoUptown-TO and Downtown-TOand buyers consider them identical. The publishers compete by choosing pricein whole centsat the same time. The only marginal cost is the $1 per-copy fee charged by the App Store for each copy purchased.

A) Assume the pandemic has increases every consumers willingness to pay by exactly $2. Explain how this effects each firms equilibrium price and quantity.

I assume this is a duopoly (oligopoly with only two firms). If they choose at the same time, BEFORE the $2 increase in demand, they will choose the profit maximizing point,

wherever that is. So, am I right to assume that the NEW profit maximizing point will be a greater quantity and price than before? And why can I assume that? Also, don't

firms in a duopoly fight over prices? I need a lot of clarification on this question!

B) You are the publisher of Uptown-TO. What would you say to the publisher of Downtown-TO to convince them that the monopoly outcome is a Nash equilibrium of the indefinitely repeated competition?

I don't understand this question at all.