Suppose that the value of a contract to a buyer is a function of her non-salvageable reliance investment. Let V(R) represent the value of a contract, where R is the level of non- salvageable reliance. The buyer can invest either $100 or $200 in reliance with the resulting impact on V(R) as follows: The contract price, P, payable on performance, is $75. 1. Assume initially that performance of the contract will occur with certainty. What level of reliance maximizes the buyer's net return from the contract? $ [ Select ] v 2. Now suppose the buyer anticipates a breach of the contract by the seller with probability 0.5 When the seller breaches, the buyer's reliance investment is completely lost as it is non- salvageable (though she does not have to pay the contract price). Ilgnoring damages, what choice of reliance maximizes the buyer's expected return in this situation? $ [ Select ] v 3. If the buyer is awarded unlimited expectation damages when the seller breaches (which happens with probability 0.5), what level of reliance does the buyer choose? $ [ Select ] v