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Suppose we are in a mining boom. BHP is also negotiating with suppliers of machinery, in order to build and equip mines. They estimate that
Suppose we are in a mining boom. BHP is also negotiating with suppliers of machinery, in order to build and equip mines. They estimate that every excavator they can source will mean they can earn an extra $2m in profits, up to 30 excavators. Caterpillar can produce up to 20 excavators at a marginal cost of $500k each, and Komatsu can produce up to 20 excavators at marginal cost of $800k each. How many excavators do they source from each, and what is the range of possible prices?
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