Needing some help. See attached file.

Please show calculations, if used.

3. 20 points. . . Al and Bert each own lube, oil and filter shops, in e duopoly market. The or! change serv1ces produced by Al and Bert are identical and both the rms have identical costs. These are the demand and cost conditions facing the Al and Bert: Demand: P = 96 ZQt = 96 'ZQA -2Q3 Costs: ATCA = ATCB = MCP. = MCI: = S [2 a. If A] and Bert were to compete over price (strut at price war) they would end tip with: Price = S . 'l'otul output = . Firm output = . Firm profits $ b. Al and Bert come to their senses somewhat and decide to conduct their competition over quantity instead. (Cournot). Find price, output and prots. Firm output 2 . Tote] output = . Price = 3 . Firm prots 5 c. What if Al and Bert come to an agreement and collude to form a prot maximizing cartel. The rms split the output and prots equally. Find cartel output, price, and prots. Cartel output = ., Price = $ . Firm output = . Firm prots 3) d. The problem is both rms have an incentive to cheat (renegej on the deal. Use the reaction functions you constructed for part b to nd the prot maximizing output for one of the rmstthe cheater) if the other (the victim). sticks with the agreed output. and then find the price and respective prots. Cheaters output = . Total output = , Price = $ Cheaters prots 3 . Victims prots 3 e. Use the information about profits from parts I: and d to ll in the payoff table below. Barr's C o-operare Don 'r C oopemre Co- operate Al's Don't Go- operate Al's dominant strategy is cooperate, don't co-operate. neither: it has no dominant strategy). Bert's dominated strategy is [co-operate. don't co DPEFEIEE, neither: it has no dominated strateglehe Nash equilibrium cell for d'iis simultaneous decision is. . This (is, is not) a prisoner's dilemma game. If this is a repeated grime and both players play at one period titfor-tat strategy to punish chcutcrs. do you think Al and Bert will co~opcrntc'? Why or whyr not? Explain in I40 characters or less