2. (POINTS: 15) Imagine you are an economist hired by a firm to evaluate the tractability of a business oppor tunity. This firm is deciding whether to accept a government proposal to start the production of a drug to treat a certain disease, the government will guarantee monopoly profits for the firm in the market during the first year, but from the second year onwards the market will be open to any firm, and players will act competitively, or to reject it which means a gain of zero. The yearly market demand is Q"(p) = 400-2p The firm that hired you has the cost structure C(q) = + 10,000 Your goal is to: (a) obtain the equilibrium quantity and price under the monopoly case, and calculate the monopoly profits for the first year; (Points: 6/15) (b) calculate equilibrium price and quantity, and profits, when the firm acts competitively; (Points: 6/15) Suppose to start production the firm needs to incur in a certain cost C, yet to be calculated. (c) What is the maximum value for C your firm is willing to incur in order not to reject the proposal? Explain your answer. (for simplicity, you can assume the value of money across time is negligibly). (Points: 3/15)