Exercise 4: Multi-Product Monopoly Consider a firm that monopolizes two markets (of two goods). Demand for good 1 is given by D,(P1, P2) = a- bpi + dp2, while demand for good 2 is given by D2(P1, P2) = a- bp2 + dp1. Where a, b > 0 and |d) = b. Production cost for each good is assumed to be zero . a) (10 points) Compute optimal prices and quantities for the firm b) (10 points) Now suppose a = 3, b = 2 and d = 1. Verify that the prices obtained in a), can be also obtained using the generalized inverse elasticity formula that we saw in class (the formula that we saw for the multi-product monopoly).Exercise 5: Static Cournot Suppose a market has two firms (Cournot duopoly) each of them with its respective cost function: C,(q ) = q3+ 2 and C2(92) = 242 + 4. Each firm sets its output simultaneously. Market demand function is given by P(Q) = 200- Q where Q = q + 9.a) (5 points) Obtain each firm's individual level of output b) (5 points) What is the market price? c) (5 points) Compute the HHI for this market