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Part $1$

An incumbent$$ firm, Firm$1,$ faces a potential$$ entrant, Firm$2,$ with a lower marginal costLOADING$....$ The market$$demand curveLOADING... is

pequals$220$minusq $1$minusq $2.$

Firm $1$ has a constant marginal cost of $$$$40$ per$$ unit, while Firm$2\text{'}$s is $$$$10.$

Part $2$

To block$$ entry, the incumbent appeals to the government to require that the entrant incur extra costs.

Part $3$

Suppose that the legal intervention imposed by the government leaves the marginal cost alone$($at $$$$10$ for Firm$2)$ but imposes a fixed cost. What is the minimal fixed cost that will prevent$$ entry?

Part $4$

The minimum fixed cost$($F$)$ that will deter entry is

Fequals$$$

$$

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