B2. Answer this question according lecture discussion and show your step-by-step calculation or a zero will be assigned. Assume market demand = 400 4 and there are two identical firms ( and ) in the industry with the same cost structure = = 0. (a) Suppose these firms can choose to cooperate (like a cartel) or not to cooperate (cheating on the cartel output by producing 5 extra units). Determine each of the four possible outcomes in terms of output, price, and profit for each of these firms. Use your results to construct a payoff matrix. Explain how you can analyze the payoff matrix to determine if these firms have any dominant strategy and if a Nash equilibrium exists that leads to prisoners dilemma when these firms only operate for one period. How do these firms and consumers do in this Nash equilibrium? (b) Explain how you can determine the best strategy for Firm in a repeated game with an unknown end date when these firms use a tit-for-tat strategy. (c) Would your results in part (b) change if these firms know the end date ?