Question
The market demand curve is given by p = 100 - Q Two firms, A and B, are competing in the Cournot fashion. Both firms
The market demand curve is given by
p = 100 - Q
Two firms, A and B, are competing in the Cournot fashion. Both firms have the constant marginal cost of 70. Suppose firm A receives a new innovation which reduces its marginal cost to c. Find the cutoff value of c which makes this innovation "drastic".
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Each firms marginal cost function is MC 70 and the market demand function is P 100 q1 q2 where Q is ...
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Step: 2
Step: 3
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Microeconomics
Authors: Douglas Bernheim, Michael Whinston
2nd edition
73375853, 978-0073375854
