2. Assume that the inverse demand is given by the linear Jnction P=A-BQ and that current marginal costs of production are c. (a) By how
2. Assume that the inverse demand is given by the linear Jnction P=A-BQ and that current marginal costs of production are c. (a) By how much would an innovation have to reduce marginal cost for it to be a drastic innovation? (b) Use your answer to derive a condition on the parameters A, B, and C that determines whether a drastic innovation is feasible. (Hint: costs cannot be negative.)
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