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Stu I pledge my honor that I have not viol This exam consists of three problems. You have 60 minutes. 1. (40 points) Consider the two telecom firms: CrossTalk and GlobalDialog. Each can choose whether to invest $10 billion in the purchase of a fiber-optic network. They make their investment decisions simultaneously. If neither chooses to make the investment, that is the end of the game. If one invests and the other does not, the investor must make a pricing decision for its telecom services. It can choose either a high price, which will attract 60 million customers, from each of whom it will make an operating profit of $400, or a low price, which will attract 80 million customers, from each of whom it will make an operating profit of $200, If both firms acquire fiber-optic networks and enter the market, then their pricing choices become a second simultaneous-move game. Each can choose either the high or the low price. If both choose the high price, they will split the total market equally; each will get 30 million customers and an operating profit of $400. If both choose the low price, again they will split the total market equally; each will get 40 million customers and an operating profit of $200. If one chooses the high price and the other the low price, then the low-price firm will get all the 80 million customers at that price, and the high-price firm will get nothing. Illustrate the interaction between these two firms using the appropriate game formats