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Question 4 (20 marks) a. Suppose the society's preferences (w) for total output (q) and variety (n) can be categorized by the following equation: w = 16qn The economy has 200 units of input. Each unit of output can be produced at a constant MC of 2, and the fixed cost is 10. What is the optimum output-variety combination? (8 marks) b. The market demand for the Coldtoys figure is shown as follow: Q = 800 - 2P Suppose the manufacturer and distributor are both monopolists in the market of production and distribution respectively. The marginal cost to produce a bottle to the manufacturer is $80. The distribution cost to the distributor is $40 per bottle. Determine the quantity transacted between distributor and manufacturer, quantity transacted between consumer and distributor, wholesale price and retail price respectively. (12 marks)