Assume that the only two firms in the industry, Sundance Inc

Assume that the only two firms in the industry, Sundance Inc. and Moondance Ltd., have entered a collusive agreement to reduce their advertising budgets to a minimum. The result is that they expect to make profits of $140 million each. However, if either of them cheats, the cheater will increase its profits by $40 million at a cost of $40 million to the other firm. If they both cheat, they will each reduce their profits by $20 million Moondance Stick to agreement Cheat on agreement Cell A Cell B Moondance: 100 Moondance: 140 stick to agreement Sundance: 140 Sundance: 180 Cell c cell D Moondance: 180 Moondance: 120 Sundance Cheat on agreement Sundance: 100 Sundance: 120 a. Complete the matrix by using the table above which shows the options facing the two firms. b. Which cell will be the likely outcome? They will chose option D