C2) Company A is the only supplier of glass in Big Apple City used for tall buildings' exteriors. Its marginal cost of production is ca=1, and it has no other production costs. The demand for such glass in Big Apple city is Qo=2-P. Company B in Jersey City produces the same glass and is considering whether to expand to Big Apple city. If it enters, it needs to get a permit to allow it to be a supplier in the Big-Apple city at a cost of L=0.5, which does not vary with quantity of output, and its marginal cost of production is CB=0.5. If it expands to the Big-Apple city, companies A and B both supply to the market, and the market price P satisfies QA+Q8=2-P, where QA is company A's production level and QB is company B's. a) If company B expands to the Big-Apple city, what is the resulting price in a Nash equilibrium? [5 marks] b) Company B hires a consulting company to advise whether it should expand to the Big-Apple city. If you're running the consulting company, what is your advice? Explain your advice. What is the largest value of the permit cost L such that you would advise company B to enter the market? [5 marks) c) Suppose both companies are in the market of Big-Apple city. Company A persuades the mayor of the city to pass an environmental law. Because of its production technology Company B is affected by the law, and to meet the new environmental standards its marginal cost of production increases by 0.7. However, Company A has a technology which meets the requirements of the law, so its marginal cost does not change. As a result, Company B's business starts to suffer. What are the profits of both firms after the law is passed? [3 marks] d) After the law in part c) is passed, if company B can use company A's technology and hence avoid the increase in its marginal cost due to the environmental law, what would be each firm's profit? [3 marks] e) After the law in part c) is passed, company B is considering to purchase a license from Company A to use A's patented production technology. If you are the manager of Company A, how much should you charge for the license? [3 marks)