Question
Consider the following inverse demand of a market: P = 100 Q. Suppose the firms in the market are identical and have MC =
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Consider the following inverse demand of a market: P = 100 – Q. Suppose the firms in the market are identical and have MC = 80.
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If a process innovation reduces MC to 70, is the innovation drastic or non-drastic and
why?
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If a process innovation reduces MC to 50, is the innovation drastic or non-drastic and
why?
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What is the threshold MC, below which the innovation becomes drastic innovation?
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Step by Step Solution
There are 3 Steps involved in it
Step: 1
To determine whether a process innovation is drastic or nondrastic we need to consider its impact on ...
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Microeconomics
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
1st Edition
978-1464146978, 1464146977
