The market demand curve is given by

p = 100 - Q

Two firms, A and B, are competing in the Cournot fashion. Both firms have the constant marginal cost of 70. Suppose firm A receives a new innovation which reduces its marginal cost to c. Find the cutoff value of c which makes this innovation "drastic".

Answer rating: 100% (QA)

Each firms marginal cost function is MC 70 and the market demand function is P 100 q1 q2 where Q is ... View the full answer