Problem 4. You work for the Department of Justice, and you have been tasked with reviewing the proposed merger between Miller and Coors (This is an actual merger that was eventually approved). The two products of main concern are Miller Lite and Coors Light. The demand for Miller Lite is given by Dm(pm, pa) = 120 4pm + 2pc, and the demand for Coors Light is given by Dc(pm, pa) = 40 2396 + 2pm. For now, we can hold the prices of all the other beers xed and ignore their impact on demand. The marginal cost of brewing Miller is cm and the marginal cost of brewing Coors is cc. 1. 2. Set up the prot maximization problem for Miller Lite before the merger. What is the best-response of Miller to a Coors price of pa? (i.e., what is the prot maximizing price given p6?) . What is the best-response of Coors to a Miller price of pm? What are the pre-merger equilibrium prices of Miller Lite and Coors Light? . What is the diversion ratio of Miller Lite to Coors Light? And what is the diversion ratio of Coors Light to Miller Lite? (Recall that the diversion ratio from Miller Lite to Coors Light is the percent of consumers that will switch to Coors after leaving Miller. You can compute this using only information on Demand) . What is the Upward Pricing Pressure of this potential merger between Miller and Coors? (Recall from the notes that UPP is equal to diversion times the markup)