Chapter 3.2.2 Advertising Part II 1.[] Two firms located at extreme points of [0,1] are facing unit mass of consumers uniformly distributed along [0,1]. The utility of a consumer located at x is V(x) = 10-x-pif buying from firm 1 V2(x) 10 (1-x) - pif buying from firm 2 However, consumers may not know the existance of firms and can be informed by firm i's advertising strategies, which determines the proportion of consumers who is aware of the existance of consumers, denoted by . The cost of advertising for firm i is A(M)=12 Assume the firms incur no other cost. (1) What is the equilibrium price P* and advertising ** level when two firms compete in setting prices and advertising simultaneously?