Task 1 (Approx. 20 minutes) Consider two firms, Ray-Bon and Gacci are the only two producers of polarized sunglasses with the highest UV protection in the market. lfthey collude to agree to share the market equally and no one cheats on the non-binding agreement (i.e. they comply), they can each make $1m of profit. If each firm cheats, the cheater can increase its profit to $1.5m and the non-cheater makes a loss of $0.5m. If they both cheat the payoff for each is 50. Neither firm has a way of checking on the activities of the other. a) Draw the payoff matrix above showing Ray-Bon choices on the vertical and Gacci choices on the horizontal. b) Describe the best strategy for each firm in a game that is played once. Are these strategies dominant strategies? c) What is the equilibrium ofa game that is played just once (highlight this in the payoff matrix), and what type of equilibrium is it? d) What is the profit for each firm if they both comply (highlight this in the payoff matrix), and what type of equilibrium is it? e) How could we get firms to both comply? 15 minutes (5 minutes to report back)