2. The state has announced its plans to license two firms to serve a market whose demand curve is Een by P=100-Q. The technology is such that each can produce any given level of output at zero t, but once each firm's output is chosen, it cannot be altered. What's the most you would be willing to pay for one of these licenses if you knew you would be able to choose your level of output first (Assuming your choice was observable by the rival firm)? b. How much would your rival be willing to pay for the right to choose second?

2. The state has announced its plans to license two firms to serve a market whose demand curve is Een by P=100-Q. The technology is such that each can produce any given level of output at zero t, but once each firm's output is chosen, it cannot be altered. What's the most you would be willing to pay for one of these licenses if you knew you would be able to choose your level of output first (Assuming your choice was observable by the rival firm)? b. How much would your rival be willing to pay for the right to choose second?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 31P: Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as...

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