The jet aircraft industry is dominated by two major competitors: Airbus (A based in Europe) and Boeing (B based in the USA). Both companies have similar technology allowing each rm to produce a jet at a cost of $20 (in millions). Accordingly, their costs functions are given by: TC(yA) = 203M TC(yB) = ZOyB In order to simplify our analysis, we assume there are no xed costs. The inverse demand function for jets by major airlines is estimated to be p(y) = 200 y a) Find analytically prot function 7TB (yB) for Boeing, given that the production of Airbus amounts to gm, 2 100 jets. In a graph with yB on the horizontal axis and 71' on the vertical one, plot the prot function. b) Is the production :93 = 100 jets Boeing's best response to yA = 100? Why or why not? Find the optimal level of production, given Airbus produces 3);; = 100, m, = 50, and yA = 0? Mark the three points in space (yA, yB). c) Find analytically the best response function for Boeing RB(yA) and plot it in the graph from point b) . d) Find analytically the best response function for Airbus, R A(yB) and add it to your graph from point b) e) Find analytically the market price of an aircraft, the level of individual and aggregate production in a CournotNash equilibrium. Also nd the level of prot of each individual rm. Show the equilibrium in your graph from b. f) What is the deadweight loss (DWL) associated with oligopolistic trading by the two rms? g) Suppose the two rms, A and B, form a cartel. What is the aggregate level of production, and prot per rm given collusion? Does collusion benet the two producers? h) Find the deadweight loss (DWL) given collusion, and compare it to the one from f) . Which loss is greater, why? 1) Is the considered cartel sustainable if the interactions, as described above, are only in the short run? Why? How about if the market interactions are repeated? Why