I need help with this homework question. Please show work so I can understand it.

Problem 1: Horizontal Merger (25 points). Assume that there are only two firms that produce non-craft beer: Coors and Budweiser. These two firms propose a horizontal merger. Consider each of thc following scenarios. a) Why would Coors and Budweiser claim that the relevant market is all cruft and non- cruft beer producers (including craft beer producers like Sierra Nevada)? What evidence might they 100k for in Order to back up this claim? b) Budweiser is currently setting the price well above its marginal cost. If Coors raises the price by $0.25, the demand for Coors will decrease by 1,000 units. At the same time, thc demand for Budweiser will incrcasc by 750 units. What is thc diversion ratio? Do you think the upward pricing pressure is small or large in this case? c) Now, assume that Coors and Budweiser are actually perfect substitutes for all con- SumerS. Demand for non-craft beer is given by Q = 8, 000 200P. Before the merger price equals marginal cost Of non-craft beer, Po = MCO = 20. After the merger, the price increases to P1 = 30 aud the marginal cost decreases to MCI. How low must MCI be so that the cost savings offsets thc DWL due to the higher price? d) At the antitrust authority, someone finds an error in the demand curve estimated in the previous part. It turns out that the demand curve is more elastic than they previously thought! Will the antitrust to be more Or less likely to block the merger than before? Explain.