nsider a market for two differentiated products. Demand for good I is given by Di(P1, P2) = 130 - P1 + 4 COIN d demand for product 2 is 2 D2(P1, p2) = 130 - 5p2+ ere pi and p2 are the prices of good 1 and 2. The cost function for both products and firm producing them is C(q) = 15q. [8 marks] Are the two goods complements or substitutes? Briefly explain why. What the diversion ratio of this demand schedule and what does this number mean? [10 marks] Suppose the two goods are produced by one firm. What are the optimal ces for the two goods? What is total profit for the firm? [Hint: Make sure the demand each good enters the monopolist's profit function!] [10 marks] Suppose firm 1 produces good 1 and firm 2 produces good 2. Assume that two firms compete in prices. Derive the reaction function of each firm and give the sh equilibrium prices and profits. Briefly explain the difference in total industry profits tween your results in (b) and (c). [12 marks] Finally, assume the two firms from (c) play the price game with an infinite