1. Suppose that each firm must make an upfront investment of $1,000 to enter the market and...

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1. Suppose that each firm must make an upfront investment of $1,000 to enter the market and that your competition has already paid this investment and chosen to produce 50 units.

This investment is nonrecoverable (sunk).

Should you make the $1,000 investment and enter the market? If so, how much should you produce and what are your profits? Continue to assume that your firm will survive for only one production period.

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