Consider a market with an incumbent firm I and a new entrant E producing a homogenous product and competing in quantities. The incumbent has a technology with cost function C_I(q) = 20q while the entrant produces with C_E(q) = 10q. The inverse market demand is given by

QUESTION 10 Consider a market with an incumbent firm I and a new entrant E producing a homogenous product and competing in quantities. The incumbent has a technology with cost function 01(9'] 2 2th; while the entrant produces with Cg} = lq. The inverse market demand is given by P = 240 * :3. Suppose the entrant is credit-constrained and had to repayI an amount of D = 1500 at the end of the period. If the entrant is not able to cover this amount with his profits. the firm has to leave the marketplace. What is the minimum quantity q; that makes sure that the entrant is unable to repay the amount of D = 1630