Suppose that the incumbent firm faces an inverse demand functionP= 110Q, and has a constant marginal cost equal to 10. The potential entrant has a constant marginal cost equal to 10 and a fixed cost of 100. The incumbent firm first determines its quantity and commit to this amount. The potential entrant then determines whether it would enter and the quantity.

1. Given that the entrant enters and the incumbent's quantityq1, the entrant's opti- mal strategy?
2. What is the minimum level of the incumbent's quantity that the entrant decides to stay out of the market?
3. Should the incumbent use the limit pricing strategy to deter the potential entrant to enter?