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Suppose that the market demand curve facing the incumbent firm is p = 460 - 0.5y . The firms total cost curve is c(y) =
Suppose that the market demand curve facing the incumbent firm is
p = 460 - 0.5y . The firms total cost curve is c(y) = 100y.
The incumbent firm is threatened by a potential entrant, which faces a fixed entry cost
K in addition to the variable cost.
The entrant's total cost is therefore
c(y) = K + 100y
Find the limit output
yL
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