Problem 3: Exclusive Dealing (25 points). Two electric car battery producers (rm 1 and rm 2) sell a homogeneous product to one monopoly electric car producer (rm A), the only consumer of electric car batteries. Firm 1 has a constant marginal cost M01 2 750 while rm 2 has a constant marginal cost M02 2 500. Firm A's demand for batteries is given by P = 1,500 Q. a) If rm 1 and rm 2 compete for rm A's business, what is the price of batteries? What is the quantity of batteries sold? What is the surplus of each rm (P81, P82, and CS)? 1)) Firm 1 has an exclusive deal with rm A where they sell for a price of P = 1,000. What quantity will they sell? What is the surplus of each rm (P31, P32, and CS) now? Would such a deal be signed? Briey explain. c) Now consider the same deal between rm 1 and rm A but with an escape clause. In particular, rm A agrees to pay P = 1, 000 per unit from rm 1 and a penalty 2: = 200 for each unit purchased from rm 2. All such penalties go directly to rm 1. (i) What price will rm 2 set now? Which producer will rm A buy from? What quantity will be sold? (ii) What is the surplus of each rm (P31, P82, and CS) in this case? Would such a deal be signed? Briey explain