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Since the profit is positive, the firm has no immediate reason to switch to producing low-quality umbrellas. Buyers are willing to pay $14 for a
Since the profit is positive, the firm has no immediate reason to switch to producing low-quality umbrellas. Buyers are willing to pay $14 for a high-quality umbrella, so the firm is earning a profit of $1 on each sale. As long as the profit is positive, it is a sustainable equilibrium for the firm to continue producing high-quality umbrellas at the given market price
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