QUESTION 7 Consider an industry with two products A and B. There are 100 consumers who value product A at vA=120 and product B at vB=280. The incumbent firm 1 produces both goods. Its marginal cost of production for good A is cA=80 and CB1=150 for good B. Suppose the incumbent firm 1 offers the two products as a bundle at a price p1. There is also a potential new entrant firm 2 who only produces good B at a marginal cost of cB2=80. Firm 2 charges a price p2 for good B. The firms compete in prices for the consumers. Which of the following statements is correct?
QUESTION 7 Consider an industry with two products A and B. There are 100 consumers who value product A at vA=120 and product B at vB=280. The incumbent firm 1 produces both goods. Its marginal cost of production for good A is cA=80 and CB1=150 for good B. Suppose the incumbent firm 1 offers the two products as a bundle at a price p1. There is also a potential new entrant firm 2 who only produces good B at a marginal cost of cB2=80. Firm 2 charges a price p2 for good B. The firms compete in prices for the consumers. Which of the following statements is correct?
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:QUESTION 7
Consider an industry with two products A and B.
There are 100 consumers who value product A
at vA=120 and product B at vB=280.
The incumbent firm 1 produces both goods. Its
marginal cost of production for good A is cA=80
and CB1=150 for good B.
Suppose the incumbent firm 1 offers the two
products as a bundle at a price p1.
There is also a potential new entrant firm 2 who
only produces good B at a marginal cost of
cB2=80. Firm 2 charges a price p2 for good B.
The firms compete in prices for the consumers.
Which of the following statements is correct?
Firm 2 serves all consumers charging a
price p2 = 110.
Firm 1 serves all consumers charging a
price p1 = 170.
Firm 2 serves all consumers charging a
price p2 = 60.
Firm 1 serves all consumers charging a
price p1 = 30.
None of the above.
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