*3.4 An incumbent can commit to producing a large quantity of output before the potential rival decides whether to enter. The incumbent chooses whether to commit to produce a small quantity, qi, or a large quantity. The rival then decides whether to enter.

If the incumbent commits to the small output level and the rival does not enter, the rival makes $0 and the incumbent makes $900. If it does enter, the rival makes $125 and the incumbent earns $450. If the incumbent commits to producing the large quantity, and the potential rival stays out of the market, the potential rival makes $0 and the incumbent makes

$800. If the rival enters, it loses $20, and the incumbent earns only $400. Show the game tree. What is the subgame-perfect Nash equilibrium? (Hint: See Q&A 13.2.)