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Suppose Bright White, a new seller of toothpaste, enters the market and charges a lower price than Freshy, the dominant firm in the market. Bright
Suppose Bright White, a new seller of toothpaste, enters the market and charges a lower price than Freshy, the dominant firm in the market. Bright White sells 1,000 tubes per week and Freshy sells 10,000 tubes per week. If the firms engage in a price war until the price is $0.50 below the average total cost and the market shares remain constant, how much does each firm lose in a week? a. Bright White loses $1,000 and Freshy loses $10,000. b. Both firms lose $5,000 c. Bright White loses $5,000 and Freshy loses $500 d. Bright White loses $500 and Freshy loses $5,000
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