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Set up the Lagrangian for the consumer's utility maximization problem in the Krugman (1979) model and write down the first order conditions. (b) Write down
Set up the Lagrangian for the consumer's utility maximization problem in the Krugman (1979) model and write down the first order conditions.
(b) Write down the profit function (profits are revenue minus costs) of a firm in the Krugman (1979) model and show that it chooses its quantity such that marginal cost equals marginal revenue, and that p(1 1/ ) = w!
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