BE SURE TO SHOW ALL YOUR MATH STEP BY STEP1. WHAT IS THE MONTHLY GAIN TO KAISER FROM CHEATING? WHAT IS THE PRESENT VALUE OF THE BENEFIT OF CHEATING?2. WHAT IS THE MONTLY COST OF PUNISHMENT TO KAISER? WHAT IS THE PRESENT VALUE OF THE COST OF CHEATING FOR THE LAST TWO MONTHS?3. WILL KAISER COOPERATE OR CHEAT?

Alcoa and Kaiser, duopolists in the market for primary aluminum ingot, choose prices of their 500 foot rolls of sheet aluminum on the first day of the month. The following payoff table shows their monthly payoffs resulting from the pricing decisions they can make. Alcoa High price Low price A B High $400, $500 $175, $575 price Kaiser C D Low price $525, $200 $273, $250 Suppose Alcoa and Kaiser repeat their pricing decision on the first day of every month. Suppose they have been cooperating for now the manager at Kaiser is trying to decide whether to cheat or to continue cooperating. Kaiser's