I Will give thumbs up to the solution that best helps me understand the question! Thanks!

3. Oligopoly I (25 points) Two family farms, Tender Goat and Healthy Goat, produce and sell organic and all natural goat meat in Kingston, ON. The local government regulates the market by issuing yearly permits to sell organic and all natural goat meat in Kingston, ON. Tender Goat and Healthy Goat are the only two farms with such permits for the years 2021 and 2022. The final product is homogenous. Total market demand for goat meat is given by Q = 14 0.2P, where P is the price per kilogram and Q is the yearly number of kilograms demanded (in 10,000s). The farms' marginal costs are identical and equal to 10, but the fixed costs are different: Tender Goat's fixed cost is equal to 20, and Healthy Goat's fixed cost is equal to 50. (a) Suppose (as in the Cournot model) that this year, each farm chooses its optimal level of output assuming that its competitor's output is fixed. i. (4 points) Find each farm's reaction function and the equilibrium values of Q and Q2, such that each farm is doing the best it can given its competitor's output. ii. (4 points) Draw the farms' reaction functions (be sure to mark both intercepts), and show the Cournot equilibrium. iii. (2 points) What is the market price? What is each farm's profit in the year 2021? (b) The 2022 permit to sell organic and all natural goat meat in Kingston, ON is tradable, and Tender Goat considers buying this permit from Healthy Goat for cash. i. (6 points) What is the maximum amount that Tender Goat would be willing to pay Healthy Goat for this permit? ii. (2 points) What is the minimum amount that Healthy Goat would be willing to accept? (c) (7 points) Is allowing the 2022 permit to be tradable good or bad for society? Discuss the qualitative impact on the social welfare (consumer surplus, pro- ducer surplus, and deadweight loss) and production efficiency. Hints: When assessing the qualitative impact, discuss the direction of the impact (up or down), without calculating the exact change in consumer surplus or dead- weight loss. Also recall how to measure producer surplus (PS): for each unit, PS is the difference between the price and marginal cost of a product; ac all units, PS is the difference between total revenue and total variable cost. When assessing the impact on production efficiency, discuss the change in the average total cost of production. across 3. Oligopoly I (25 points) Two family farms, Tender Goat and Healthy Goat, produce and sell organic and all natural goat meat in Kingston, ON. The local government regulates the market by issuing yearly permits to sell organic and all natural goat meat in Kingston, ON. Tender Goat and Healthy Goat are the only two farms with such permits for the years 2021 and 2022. The final product is homogenous. Total market demand for goat meat is given by Q = 14 0.2P, where P is the price per kilogram and Q is the yearly number of kilograms demanded (in 10,000s). The farms' marginal costs are identical and equal to 10, but the fixed costs are different: Tender Goat's fixed cost is equal to 20, and Healthy Goat's fixed cost is equal to 50. (a) Suppose (as in the Cournot model) that this year, each farm chooses its optimal level of output assuming that its competitor's output is fixed. i. (4 points) Find each farm's reaction function and the equilibrium values of Q and Q2, such that each farm is doing the best it can given its competitor's output. ii. (4 points) Draw the farms' reaction functions (be sure to mark both intercepts), and show the Cournot equilibrium. iii. (2 points) What is the market price? What is each farm's profit in the year 2021? (b) The 2022 permit to sell organic and all natural goat meat in Kingston, ON is tradable, and Tender Goat considers buying this permit from Healthy Goat for cash. i. (6 points) What is the maximum amount that Tender Goat would be willing to pay Healthy Goat for this permit? ii. (2 points) What is the minimum amount that Healthy Goat would be willing to accept? (c) (7 points) Is allowing the 2022 permit to be tradable good or bad for society? Discuss the qualitative impact on the social welfare (consumer surplus, pro- ducer surplus, and deadweight loss) and production efficiency. Hints: When assessing the qualitative impact, discuss the direction of the impact (up or down), without calculating the exact change in consumer surplus or dead- weight loss. Also recall how to measure producer surplus (PS): for each unit, PS is the difference between the price and marginal cost of a product; ac all units, PS is the difference between total revenue and total variable cost. When assessing the impact on production efficiency, discuss the change in the average total cost of production. across