The inverse market demand curve for bean sprouts is given by P(Y) = 200 - 5Y, and the total cost function for any firm in the industry is given by TC(y) = 10y. Marginal cost for any firm in the industry is MC(y) = 10. (a) The change in price for a one-unit increase in output is equal to If the bean-sprout industry were perfectly competitive, what's the industry output and industry price at the long-run equilibrium? (b) Suppose that two Cournot firms operated in the market. The reaction function for Firm 1 would be (Reminder: Unlike the example in your text- book, the marginal cost is not zero here.) The reaction function of Firm 2 would be If the firms were operating at the Cournot equilibrium point, in- dustry output would be -; each firm would produce and the market price would be (c) For the Cournot case, draw the two reaction curves and indicate the equilibrium point on your graph. (d) If the two firms decided to collude, what's the industry output and industry price at equilibrium? (e) Suppose both of the colluding firms are producing equal amounts of output. If one of the colluding firms assumes that the other firm would not react to a change in industry output, what would happen to a firm's own profits if it increased its output by one unit? (f) Suppose one firm acts as a Stackleberg leader and the other firm behaves as a follower. The maximization problem for the leader can be written as