Firm 1 must decide whether to enter an industry in which rm 2 is an incumbent. To enter this industry, rm 1 must choose to build either a plant with a small output capacity (8), or large output capacity (L). A plant with small capacity costs $50 to set up; one with large capacity cost $175. In either case, the marginal cost of production is zero. But rm 1 can also opt to stay out (0), in which case it does not incur any type of cost. Firm 2 is able to observe rm 1's decision before deciding whetherto expand or not its initial small output capacity operation. Expanding (E) costs rm 2 $88, whereas not expanding (N) incurs no cost for the rm. In either case, the marginal cost of production is also zero. The revenues under the different scenarios are given below. - If only one small rm exists, its revenue is $80, the other earns zero. - If two small rms exist, each earns revenue of S70. - If only one large rm exists, its revenue is $200, the other earns zero. - If two large rms exist, each earns revenue of $90. - If one small and one large rm exist, the small rm earns $40, while the large one earns $160. Answer the following: a) (0.5 marks) How many pure strategies are available for rm 1? b) (0.5 marks) How many pure strategies are available for rm 2? D c) (1 mark) What is the sum of the rms' prots in the subgame perfect equilibrium? D