Consider the following highly simplified picture of the personal computer industry. A large number of price-taking firms assemble computer systems; call them computer OEMs (Original Equipment Manufacturers). Each of these firms must buy three inputs for each computer system that it sells 0 A variety of components that are themselves supplied competitively and collectively cost the computer OEM $9 per computer. - The Windows operating system, available only from Microsoft, at a price pM. Microsoft's marginal cost is $1 0 a Pentium microprocessor available only from Intel, at a price a p,. Intel's marginal cost is $5 Since each computer system requires precisely one operating system and one microprocessor, the marginal cost of a computer to an OEM is $$9 + P_M + P_I$$ . Let P denote the price of the computer system, the demand for computers is given by Q=187-9*P 1. Suppose that Microsoft and Intel simultaneously and independently set the prices for Windows and Pentium chips, PM and P, . - The demand function for Microsoft is of the form Q= aM-bMPM- 0MP, What is 0,, [3 what is bM [:] and what is 6,, [j I The demand function for Intel is of the form Q = a,-b,PM-c,P, What is a, C] what is b, C] and what is c, C] - Microsoft's best price as a function of Intel's price is of the form PM =AM+BMP, What is AM [: and what is BM [:] I Intel's best price as a function of Microsoft's price is of the form P, =A,+B,PM What is A, [:] and what is B, C] What price does Microsoft charge the GEMS [:] What price does Intel charge the GEMS C] What is the final price consumers pay [:]