Please solve the following:

2. Under the terms of the current contractual agreement, Torn Horton's Donuts (TH) is entitled to 20 percent of the revenue earned by each of its franchises. Hence, the franchise owner keeps 80 percent of revenue earned. TH's best-selling item is the BigMitt (it is as big as a goalies mitt). TH supplies the ingredients for the BigMitt (sugar, our, sugar) at cost to the 'anchise. The anchisee's average cost per BigMitt (including ingredients, labor cost, and so on) is $.60. At a particular anchise restaurant, weekly demand for BigMitts is given by P = 3.50 - Qr'1000. a. Suppose the franchise owner sets the price and sales quantity. (i)What price and quantity will the owner set? (ii) What is TH's net prot? 1What is the franchisee's net prot? b. (i) If TH sets the price and weekly sales quantity of BigMitts, what quantity and price would it set? (ii) What is TH's net prot? What is the franchisee's net prot? (iii) How does the total prot earned by the two parties compare to their total prot in part a? c. Now, suppose TH and an individual franchise owner enter into an agreement in which TH is entitled to a share of the franchisee's prot. (i) Under prot sharing, what will be the price and quantity of BigMitts? (ii) Does the exact split of the prot a'ect your answer? Explain. (iii) What is the resulting total prot? d. Can you nd a prot sharing arrangement so that both TH and the franchise owner prefer prot sharing over: (i) the arrangement in part a; (ii) over the arrangement in part b. Now suppose that because of the Covid19 pandemic and global supply shortages the franchisee can sell no more than 1300 BigMitts per week. e. Resolve part (c) if the 'anchisee can sell no more than 1300 BigMitts per week. f. Continue to assume that the 'anchisee can sell no more than 1300 BigMitts per week and that TH and the franchisee engage in prot sharing. What would be the total combined value to TH and the franchisee of the ingredients and labor to be able sell one additional BigMitt per week