Two companies, Acme and Pinnacle, simultaneously decide whether to produce a good quality product or a poor quality product. In the matrix below, the dollar amounts are the payoffs and they represent annual profits for the two companies. Acme's Decision Good Quality Poor Quality Acme's profit = $6 million Acme's profit = $5 million Good Quality Pinnacle's Pinnacle's profit = $6 million Pinnacle's profit = $8 million Decision Acme's profit = $8 million Acme's profit = $7 million Poor Quality Pinnacle's profit = $5 million Pinnacle's profit = $7 million a. Solve the one-shot game using iterative dominance, if possible. (5 points) b. Solve for the Nash Equilibrium(-ria), if any, of this game. (3 points) C. Given your answer to part (b) above, is the NE also Pareto superior to any other outcome in the game? Why? (Skip if no NE) (3 points) d. Would a move from (Good Quality, Poor Quality) to (Poor Quality, Poor Quality) be a Pareto Superior move? Why? (4 points)e. What kind of a game is this? Explain. (3 point) f. How much would Acme be willing to pay to change the game from simultaneous- move to a sequential-move game, in which Acme moves first and Pinnacle, after observing Acme's choice, moves second? (5 points) Suppose that the two firms can choose to adopt the following mechanism to solve the incentive problem: Write a legally binding contract, which would stipulate that a third-party arbitrator, who can directly observe cheating, will ensure that cheaters pay an $x penalty to the non- cheater. Assume that the costs of writing the contract and enforcing it are negligible. (Here cheating is defined as the strategy that would yield a Pareto inefficient outcome for the two companies). g. Find the minimum value of $x necessary to ensure that the strictly dominant strategy for each firm is to produce poor quality. Explain. (6 points) h. Find the minimum value of $x necessary to turn this game into a coordination game (where both firms choose the same strategy). Explain. (6 points)