There are two markets (e.g. corresponding to two different locations), each with demand function p - 100 - Q. There are two firms, with marginal costs 1 0 and C2 - 60, respectively. Initially there is only one firm in each market. 1. Calculate the prices in each market. Calculate total consumer and pro- ducer surplus (across both markets). Also calculate the markup in each market and the aggregate markup across the two markets, weighted by the corresponding output shares, m191 + m292 m = 91 + 92 where mi = (pi - Ci) /pi. Also compute a Herfindahl index taking into account the market shares s1 = q1/ (91 + 92) and $2 - 92/ (91 + 92). 2. Now suppose that both firms are allowed to participate in both mar- kets as Cournot competitors. Will both firms produce? Find the equi- librium. Calculate total consumer and producer surplus (across both markets). What happens to each? Calculate the Herfindahl index and the aggregate markup in the same way as before. 3. Has concentration increased, as measured by the average herfindahl in- dex? Has market power increased as measured by the average markup? What happened to total surplus? Is the change good or bad for the economy