Can someone please answer this asap? Thank you in advance
5 12 points Suppose that two firms compete in an industry, both with constant marginal cost and average cost of $10. Assume the market inverse demand curve is P = 250 - Q where the market output Q is the sum of all firms' individual outputs, i.e., Q = q1 + q2. Assume that two firms compete in quantities simultaneously. (Now, forget about the cheating/deviation and cartel story in the previous questions) Suppose that one day, Firm 1 CEO discovers a new technology that will help Firm 1 to announce its market output faster than Firm 2, and hence make firm 1 the Stackelberg leader every period. By this technology, Firm 1 can earn the Stackelberg profit every period. That is, in the first period, Firm 1 announces its output before Firm 2, and Firm 2 can observe Firm 1's output decision. The market clearing price is determined right after. In the second, period, this game is played again, i.e., Firm 1 announces its output before Firm 2, and Firm 2 can observe Firm 1's output decision. The market clearing price is determined right after. The game ends after two periods. To own this technology firm 1 has to pay a lumpsum (one-time) amount of $F. If the CEO does not buy the technology, then every period the two firms choose their output simultaneously and the market clearing price is determined right after. Again, the game ends after two periods. The CEO contemplates whether he or she should buy the technology and earn the Stackelberg leader profit every period for two periods or should accept the Cournot profits every period for two periods. Let the interest rate be 0.6. Remember that the cost of the technology is paid only once, not every period, and is equal to $ F. Calculate the present value of Firm 1's profits if Firm 1 does not buy the technology. Calculate the present value of Firm 1's profit is Firm 1 buys the technology. What is the maximum he or she would pay for the new technology? The present value of Firm 1's profits if Firm 1 does not buy the technology is $ type your answer... The present value of Firm 1's profits if Firm 1 pays $F and buys the technology is $ type your answer... The maximum that the CEO would pay for the new technology is $ type your