13

1

0

.

Suppose that the market demand curve facing the incumbent firm is

p = 460

-

0.5y.

The firms total cost curve is

c(y) = 100y.

The i

ncumbent firm is threatened by a potential entrant, which faces a fixed entry cost

K

in addition to the variable cost.

The entrant's total cost is therefore

c(y) = K + 100y

.

Find the limit output

y

L