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Suppose there is only one firm in the industry. The consumers are identical, and all have the following demand, q = a - p. The
Suppose there is only one firm in the industry. The consumers are identical, and all have the following demand, q = a - p. The marginal cost is 10. In addition, suppose that the firm can charge an entry price and a unit price > a) Compute the optimal price and quantity set b) Now suppose that the consumers are no longer identical. The same shape functional characterizes the demand but for half of the consumers the constant a is a low number and for the other a higher number. Would it affect your answer to part (a)? Respond in words only
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