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This is how the question was presented 14) Suppose Firm 1 and 2 produce homogenous goods at the same marginal costs. Illustrate their reaction functions

This is how the question was presented

14) Suppose Firm 1 and 2 produce homogenous goods at the same marginal costs. Illustrate their reaction functions in a Figure. Assume that both firms benefit from a process innovation which lowers their marginal costs. Illustrate the changes in the reaction functions and the changes in equilibrium outputs in the figure.

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