Consider a town in which only two residents, Sam and Teresa, own wells that produce water safe for drinking. Sam and Teresa can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. PriceQuantity DemandedTotal Revenue(Dollars per gallon)(Gallons of water)(Dollars)5.40004.9540$198.004 .5080$360.004.05120$486.003.60160$5 76.003.15200$630.002.70240$648.002. 25280$630.001.80320$576.001.35360$4 86.000.90400$360.000.45440$198.0004 800Suppose Sam and Teresa form a cartel and behave as a monopolist. The profit-maximizing price is $per gallon, and the total output is$gallons. As part of their cartel agreement, Sam and Teresa agree to split production equally. Therefore, Sam's profit is$, and Teresa's profit is$.Suppose that Sam and Teresa have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Sam says to himself, "Teresa and I aren't the best of friends anyway. If I increase my production to 40 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow."After Sam implements his new plan, the price of water(decreased or increased)??? to $$ per gallon. Given Teresa and Sam's production levels, Sam's profit becomes $$ and Teresa's profit becomes$$.Because Sam has deviated from the cartel agreement and increased his output of water to 40 gallons more than the cartel amount, Teresa decides that she will also increase her production to 40 gallons more than the cartel amount. After Teresa increases her production, Sam's profit becomes$, Teresa's profit becomes$, and total profit (the sum of the profits of Sam and Teresa) is now$.True or False: Based on the fact that both Sam and Teresa increased production from the initial cartel quantity, you know that the output effect was larger than the price effect at that quantity. A. TrueB. FalseSam and Teresa have each cheated on their cartel agreement and increased production by 40 gallons more than the cartel amount. However, they both realize that if they continue to increase output beyond this amount, they'll each suffer a decrease in profit. (To see this for yourself, consider Sam's profit when he produces 80 gallons more than the cartel amount compared to his profit when he produces 40 gallons more than the cartel amount.)Neither Sam nor Teresa has an incentive to further increase output, nor does either have an incentive to decrease output. This outcome is an example of .(a nash equilibrium ,predatiry pricing, tying, resale price maintenance)