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Industrial organization problem For problems 1, 2, 3 and 4 consider a market con- taining four identical firms each of which makes an identical product.

Industrial organization problem

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For problems 1, 2, 3 and 4 consider a market con- taining four identical firms each of which makes an identical product. The inverse demand for this product is P = 100 - Q, where P is price and O is aggregate output. The production costs for firms 1, 2, and 3 are identical and given by C(q) = 20q; (1 = 1, 2, 3), where q, is the output of firm i. This means that for each of these firms, vari- able costs are constant at $20 per unit. The pro- duction costs for firm 4 are C(q,) = (20 + 7)q4, where y is some constant. Note that if y> 0, then firm 4 is a high-cost firm, while if y

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