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8. There are two auto producers, firm 1 and firm 2. The cars they produce are essential identical. The market inverse demand curve is given
8. There are two auto producers, firm 1 and firm 2. The cars they produce are essential identical. The market inverse demand curve is given by P=a-bQ, where Q is market output (in thousands of units) and P is price (in thousands of dollars). It is estimated that a=25 and b=0.1. 3 Both firms have a marginal cost of $10,000 per car. Competition in the auto market works as follows. At the beginning of each year, both firms simultaneously and independently decide how many cars to produce. Then the market price adjusts so that supply equals demand. What is the deadweight loss (in millions of dollars)?? A. $100 B. $125 C. $250 D. $300
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