2.2 Industry structure Two taxi companies compete in the taxi industry: Gold Top Taxis and Dark Grey Cabs. Every morning the two taxi companies each decide how many taxis to put on the road. These decisions effectively determine the total number of taxi trips that are supplied into the market on that day. Consumers have no apparent preference over taxi companies. Inverse demand in the market has been estimated to be. Q P 50 _ ml where P represents the price of a taxi trip in dollars, and Q is the total number of taxi trips supplied into the market on a given day. Gold Top Taxis faces a marginal cost of MCG = $12.50 per trip. Dark Grey Cabs marginal cost is MCD = $14.00 per trip. Both companies incur fixed costs of FCG = FCD = $100,000 per day (regardless of the number of trips supplied). 3.1 Required steps When completing the industry analysis you should assume that firms are engaged in Cournot Competition. Use the subscript G to denote variables belonging to Gold Top Taxis, and the subscript D to denote variables belonging to Dark Grey Cabs. Step 1: Derive the two firms' total cost functions for the case in which there is no tax imposed on the taxi industry. (3 marks) Step 2: Derive the two firms' profit functions for the case in which there is no tax imposed on the taxi industry. (4 marks) Step 3: Derive the two firms' best response functions for the case in which there is no tax imposed on the taxi industry. (6 marks) Step 4: Derive the long-run equilibrium firm quantities, market price, firm profits, and consumer surplus, for the case in which there is no tax imposed on the taxi industry. (8 marks) Step 5: Repeat steps 1 to 4 for the case in which a $2.40 tax per trip is imposed on the taxi industry. (20 marks) Step 6: Derive the long-run equilibrium firm quantities, market price. firm profits. and consumer surplus, for the case in which a $50,000 per day tax is imposed on the taxi industry. (9 marks)