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A manufacturer, M, who has market power in its industry, sells to an intermediary retailer, R, who is a monopolist in the downstream market for the manufacturer's product. Suppose M has constant marginal cost, Mqu} = c = 3, and sets a wholesale price, w, on each unit purchased by R. The retailer, R, then sets a uniform posted price, p. at which to sell the product in the downstream market. Assume that R's only costs per unit are the wholesale price it has to pay to M. The demand in the downstream market is given by Dlp} = 80 - 4p. (a) If the manufacturer can only sell through R as an intermediary, nd the prot-maximizing prices, w* and p* that will be charged by M and R, respectively (use the markup formula, as in the lecture videos and the book). (b) Now suppose that M can sell directly to the downstream market. What price would it charge? (c) Compare the total (joint) prots in part (a) with the total prots in part {b}. (cl) Briey explain another way that the two rms could resolve the double marginalization