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Q P TT Collusion 55 55 110 115 6050 6050 Cournot 73 73 147 78 5353 5353 Defection Threat We're continuing our investigation of the latinum duopoly. Recall that P = 225 - Q and that TC-5q. Assume that both firms choose a quantity to produce simultaneously. 1. Compute the values for the 'Defection' row: a scenario where the firms agree to collude as a monopoly, but Firm 1 defects. (Find the profit maximizing quantity for Firm 1 to produce if Firm 2 produces the collusion quantity). (2 pts) 2. Compute the values for the 'Threat' row: a scenario where Firm 1 threat- ens to continue to produce its monopoly quantity to dissuade Firm 2 from entering. (Find the profit maximizing quantity for Firm 2 to produce if Firm 1 follows through). (2 pts) 3. Using the table above, construct a normal form game of this market (as below) and find the Nash Equilibrium quantity produced by each firm in this market in a one shot setting. (You'll also need to compute the payoffs for any missing combinations from above.) (1 pts) 0 55 73 55 73 110 4. Is Firm 1's threat to Firm 2 credible? Explain. (2 pts)