Consider the following inverse demand of a market: P = 100 Q. Suppose the firms in
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Question:
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Consider the following inverse demand of a market: P = 100 – Q. Suppose the firms in the market are identical and have MC = 80.
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If a process innovation reduces MC to 70, is the innovation drastic or non-drastic and
why?
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If a process innovation reduces MC to 50, is the innovation drastic or non-drastic and
why?
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What is the threshold MC, below which the innovation becomes drastic innovation?
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Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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