This assignment will assess your aptitudes in both of these domains. You are to conduct an industry analysis based on the scenario detailed in section 2. Then use your analysis as the basis for a brief (a short report) summarising your recommendations and the associated rationale.

3 Industry analysis For your Industry Analysis you must complete each of the steps detailed below. The required analysis draws on content covered in lectures l (primarily lecture Q}. When completing the steps you must: or Type all equations using the 'lnsert Equation' function (or equivalent]. I: Show all of your working. I: Include sufficient written description for the reader to followI your process. I Use appropriate notation and economic terminology. Your audience for the industry analysis is other expert economists who may be required to review your work. There is no page limit for the Industry Analysis. 3.1 Required steps When completing the industry analysis you should assume that firms are engaged in Cournot Competition. Step 1: Using the information provided in the scenario. derive a total cost function for a typical firm. Use 63;. to indicate the number of packages transported by the firm [measured in millions of packages). (4 marks) Step 2: Using the cost function from step 1. derive a profit function for the typical firm. Use X to represent the combined number of packages transported by all other firms {measured in millions of packages]. (7" marks] Step 3: Derive the typical firm's bestresponse function. [T marks] Step 4: Find the equilibrium quantity of the typical firm as a function of the total number of firms competing in the market. Use N to represent the total number of firms competing in the market. [5 marks) Step 5: Find the equilibrium market quantity and market price as a function of N. [8 marks} Step 15: Find the equilibrium producer surplus of the typical firm as a function of N. [8 marks} Step 7': Complete any additional calculations that you require to support your recommen- dation. (10 marks]