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Consider a market for a good with inverse demand P(Q) = 1 Q. Suppose first that there is a single firm in market, which we
Consider a market for a good with inverse demand P(Q) = 1 Q. Suppose first that there is a single firm in market, which we call firm 1. Firm 1 can invest to reduce its marginal cost. Specifically, firm 1's marginal cost of production is equal to ; a, where a is its investment and ;
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