2. Demand in the downstream market is linear and given by P = A - Q. The production downstream is fixed proportions. Production requires one unit of r and one unit of y per unit of output Q. The downstream market is competitive. The price of I is c, its marginal cost of production. The cost of production of y is w. Both r and y are variable inputs. (a) Find the cost function downstream. (b) What is the price downstream? (c) Suppose there is an exclusive supplier of y. (i) What is the derived inverse demand for input y? (ii) Explain the condition that determines the profit-maximizing whole- sale supply by the upstream monopoly supplier of y. (iii) What is the monopoly price of y, monopoly quantity of y, price and output of Q? (iv) Explain what limits the exercise of market power by the profit- maximizing upstream monopolist. (v) Compare monopoly pricing in y with competitive supply of y by finding (a) the change in downstream consumer surplus. (b) the change in downstream profits. (c) the change in upstream profits. (d) the change in deadweight loss downstream. (e) the change in deadweight loss upstream. (f) the change in total surplus. (g) and showing the change in total surplus equals the deadweight loss, the upstream and downstream deadweight loss are equal