Consider a market characterized by demand Q = 80/6 − P/6 . It is served by...

Consider a market characterized by demand Q = 80/6 − P/6 . It is served by two firms A and B, and both firms have constant marginal cost equal to 8. Suppose an investment by firm A reduces its marginal cost to 5 (a decrease of 37.5%), while B’s marginal cost remains at 8. If the firms compete by setting quantities, what is the predicted percentage change in the market price? Show your work.

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Rahul Sunny answered 1 year ago

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