Problem 5: [20 pts] Consider the two firm Bertrand duopoly studied in class. Firms 1 and 2 set prices P1, P2 2 0 simultaneously (assume that the firms can set prices that are any positive, real number). Whoever sets the lowest price supplies the whole market while if the two firms set the same price the firms split the market equally. Suppose that the marginal cost of production of both firms is 20 and the demand is given by: Q = 60 -P. 2 Part a: /5 pts/ What is the best response of firm 1 if firm 2 sets a price of 80? Justify your answer. Part b: 5 pts/ What is the best response of firm 1 if firm 2 sets a price of 25? Justify your answer. Part c: 5 pts) What is the best response of firm 1 if firm 2 sets a price of 15? Part d: (5 pts) What is the Nash equilibria of this game? What are the profits of each firm in the Nash equilibrium