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Suppose DOJ wants to test if products A and B are sufficiently broad to constitute a relevant product market, using the Hypothetical Monopolist Test. Assume that PA = PB = 60, mc₁ = mcß = 20, and 9A = 9B = 1000. For every $1 increase in the price of product A, A loses 20 units of sales to B, and loses 30 units of sales to products outside the candidate market.

Suppose DOJ wants to test if products A and B are sufficiently broad to constitute a relevant product market, using the Hypothetical Monopolist Test. Assume that PA = PB = 60, mc₁ = mcß = 20, and 9A = 9B = 1000. For every $1 increase in the price of product A, A loses 20 units of sales to B, and loses 30 units of sales to products outside the candidate market.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q3 Suppose DOJ wants to test if products A and B are sufficiently broad to constitute a relevant product market, using the Hypothetical Monopolist Test. Assume that PA = PB = 60, mc₁ = mcß = 20, and 9A=9B = 1000. For every $1 increase in the price of product A, A loses 20 units of sales to B, and loses 30 units of sales to products outside the candidate market.
Transcribed Image Text:Q3 Suppose DOJ wants to test if products A and B are sufficiently broad to constitute a relevant product market, using the Hypothetical Monopolist Test. Assume that PA = PB = 60, mc₁ = mcß = 20, and 9A=9B = 1000. For every $1 increase in the price of product A, A loses 20 units of sales to B, and loses 30 units of sales to products outside the candidate market.
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