Q2. Chap 6, Part IV (Retail Competition):

We still have the same monopolist manufacturer with the marginal cost at 40 (no fixed costs) and the same retail market demand at p=360-q. But now there is a Bertrand price competition in the retail market. In the beginning the manufacturer charges both retailers the same wholesale price w. After seeing w, the two retailers simultaneously choose their retail prices p₁ and p₂ to compete in the retail market. And all the firms are separate from each other.

(Q2F). Find the new Nash equilibrium.

(Q2G). If each retailer makes a sales effort, the retail demand will be increased to p=720-q. With the cost of effort at 100 for each retailer, will both retailers be willing to make the effort? Briefly explain your reason.