Question
Suppose all firms in an industry have access to a technology that has a positive fixed cost and then a constant marginal cost of production
Suppose all firms in an industry have access to a technology that has a positive fixed cost and then a constant marginal cost of production thereafter. Explain why a price equal to marginal cost maximizes the sum of consumer and producer surplus. What would be producer surplus if price was equal to marginal cost?
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
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