1. (10pts) Consider the Bertrand duopoly discussed in class. Assume each firm has constant marginal cost c = 10 and zero fixed cost. Each firm chooses a price P i 0 . The market demand is given by Q = 130 P , where P = min { P 1 , P 2 } is the market price. Refer to the notes for more details on how payoffs are computed. a) (2pts) If firm 1 is the only firm on the market, what price would this monopolist charge? b) (2pts) In the Bertrand model with both firms on the market, if firm 2 chooses a price higher than the monopoly price, what is firm 1's best response? c) (3pts) Use payoffs to explain why ( P 1 = 10 , P 2 = 10 ) is Nash equilibrium. d) (3pts) Suppose both firms choose the monopoly price. How much profit would each firm make? Explain why it is not Nash equilibrium..