Consider an industry with two firms, each producing an identical product. Total cost functions for the firms are given by TC₁ =2_q1 and TC₂ =14q₂. Demand for the product is given by P = 50 - (q₁+q₂).

Consider an industry with two firms, each producing an identical product. Total cost functions for the firms are given by IC, = 2q and TC, =14q2- Demand for the product is given by P = 50 -(qitq2). 1) If firm 1 produces 36 units, how will firm 2 respond? (Will it produce any output at all?) Is this predatory pricing? Why or why not? (10 possible points) 2) Exclusive dealing contracts are often considered legal. Consequently, it must be that an exclusive dealing contract between a manufacturer and a retailer benefits consumer in some circumstances. Give an example of potential benefits to consumers from such an exclusive dealing contract. (60 words or less) 3) Give an example of a tying arraignment that would be legal. Explain why it would be legal. (40 words or less) 4) Suppose Android currently holds approximately 35 percent of the smartphone market in a Latin American country (with the same antitrust laws as the US). Suppose further that America Movil holds about 80 percent of the wireless subscribers in that country. Android signs a two-year contract with America Movil, making Android the exclusive smartphone available to America Movil subscribers. Would this agreement violate US antitrust law? Why or why not? If it does, what can be altered to make the agreement legal? 5) Should it ever be economically efficient to use a per se rule? When would it be efficient? 6) Why is market definition an important in the outcome of antitrust cases? Should it be this important