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There is also a potential new entrant, firm 2, who only produces good B at a marginal cost of cB2>0. This firm has to pay
There is also a potential new entrant, firm 2, who only produces good B at a marginal cost of cB2>0. This firm has to pay K=20 to enter the market. If it enters, it set a price p2 for good B and competes with the incumbent in prices for the consumers. Consider a game where the entrant decides whether to enter or not. Then if entry occurs, firms compete; otherwise firm 1 remains a monopolist. Which of the following statements is correct? [There may be more than one correct statement.] Suppose firm 2 has entered the market. If cB2=70, consumers buy from the incumbent at an equilibrium price of 220. Suppose firm 2 has entered the market. If cB2=30, consumer buy from the entrant at an equilibrium price of 50. The entrant makes a profit of 24,000. Suppose firm 2 has not entered the market.Monopoly profits of firm 1 are 45,000. Suppose firm 2 has not entered the market. Monopoly profits of firm 1 are 24,000. If cB2<50, then entry always occurs. If cB2=20 and K=2,000, then entry occurs. If cB2=40 and K=500, then entry occurs. If K=4000 and cB2<10, then entry occurs. If there is no cost of entry
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