Consider a duopoty in which the two- rms compete by setting their quantities but Firm 1 has rst rmver advantage (i.e., Firm 1 is the Stackelberg Leader). We want to consider whether Firm 1 should use its advantage to drive Firm 2 out of the market. Suppose the inverse market demand is P (Q1 ,qg) =270 -q1 -q2 and each rm has a marginal cost of $65 per unit. Also assume that fixed costs are negligible. Strategy : Firm 1 does not drive Firm 2 out of the market if Firm 1 does not drive Firm 2 out of the maricet, the resulting equilibrium will be the NashStackelberg equilibrium. Calculate the equilibrium when Firm 1 moves first and determine Firm 1's profits in this equilibrium. (Enter numeric responses roundedto two decimal places.) Equilibrium quantities: q1 = and q2 = Equilibrium price: P = $ Firm 1's profits: I1 = $ Strategy : Firm 1 drives Firm 2 out of the market Consider an alternative strategy where Firm 1 produces a quantity that results in Firm 2 producing nothing. Calculate the minimum quantity that Firm '1 would have to produce to drive Firm 2 out of the market, the resulting market price, and Firm 1's profits. Firm 1's quantity: q.1 = D units. (Enter numeric response rounded to two decimal places.) Equilibrium price: P = . (Enternumeric response rounded to two decimal places.) Firm 1's prots: I1 = SD. Firm 1 would need to continue producing at the higher level you found under Strategy #2 to keep Firm 2 out of the market. Comparing Firm 1's profits under the strategies, what is tl'e optimal strategy tor Firm 1, the Stackelberg leader, to use? 0 A. Strategyt O B. Strategy2