Left and Right Enterprises are in a duopoly, earning each annual profits of 10 million per year. Right Enterprises could earn 20 million per year as a monopolist. Right Enterprises drops its price to 60 when its marginal cost is 70 and holds it there for a year to be able to drive Left Enterprises out of the market.

(a) What pricing strategy is the manager of Right Enterprises considering? Explain this strategy and how it helps to reduce competition in a market

(b) The year that drops its price, Right Enterprises will lose 10 million. At what level of interest rate i the strategy of Right Enterprises will be profitable?