2) Consider the Stackelberg model we discussed in class. Firms choose quantities, with firm A moving first, and then firm B. Market demand is given by Q = 120 - Pa) Recall that firm B's best-response function is 120 - q.A 48 = 2 Substitute this best-response function into the equation for A's profit, TA = 4A X (120 - qA - 98) , to express A's profit as a function of q4, where profits for A are labelled by TA- Next, substitute this best-response function into the analogous equation for B's profit, TB = 48 x (120 - qA - 98) , to compute B's profit as a function of ga, where profits for B are labelled ag. Finally, write the expression for A's profit if B produces zero as a function of qa, labelled was (where the M subscript stands for the fact that A is a monopoly if B produces zero). b) Use the formulae from a) to fill in the following table: Comparison of Profits qA 20 40 60 80 100 120 The Stackelberg equilibrium for this industry is qA = 60. Does your table from b) confirm this result? Explain your answer. c) How much would A have to produce to deter B's entry if B had a fixed cost of entry equal to a bit more than 400? If # had a fixed cost of entry a bit more than 100? Would it be worthwhile for A to deter B's entry in these cases? Explain your answers