Part C. Bertrand Competition on Pricing a. Suppose demand is Q = 50 - P. Two firms with marginal cost c = 10 are engaged in Bertrand competition. In the Nash equilibrium, what is the price charged by both firms? Justify your answer to the last question. b. In an infinitely repeated game of price competition, suppose two firms are playing the grim trigger strategy - if your rival reneges in one round, you renege in all subsequent rounds. They discount future payoffs at B'. A firm will play the monopoly price and earn 200 every period, so long as the other firm does the same. However, if a firm deviates with a small price-cut from playing the monopoly price to get the payoff of 400, the other firm plays the one-shot Bertrand outcome forever. Explain why collusion is sustainable in the last example, under the condition you found. (Hint: you may want to use the formula for sum of infinite series, A/(1- B) with the first term, A in the series)