Suppose all firms in an industry have access to a technology that has a positive fixed cost
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Question:
Suppose all firms in an industry have access to a technology that has a positive fixed cost and then a constant marginal cost of production thereafter. Explain why a price equal to marginal cost maximizes the sum of consumer and producer surplus. What would be producer surplus if price was equal to marginal cost?
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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