Question 1 In a market with annual demand 12? = lilil p, there are two rms, A and B, that malce identical products. Because their products are identical1 if one charges a lower price than the other1 all consumers will want to buy from the loner-priced rm. If they charge the same price? consumers are indifferent and end up splitting their purchases about eyenly between the rms. Marginal cost is constant and there are no capacity constraints. 1. 1iE'Fhat are the single-period Nash equilibrium prices? pg and pg? . 1i'it'hat prices would maximize the two rms' joint prots? . If the interest rate is NEE, is one repeated-game Nash equilibrium [or both rms to charge the price you found in part b? 'What if the interest rate is ll'F'E-'i What is the highest interest rate at which the joint prot-maximising price is lltlhlE? . Describe qualitatively how your answer to c would change if neither rm was certain that it would he able to detect changes in its rival's price. In particular~ what if a price change is detected with a probability of (1.7 each period after it occurs'.' Note: Do not try to calculate the new equilibria. . Now is it a repeated-game Nash Equilibrium [or both rms to charge the monopoly price from part b