There are two firms. Firm 1 is the incumbent, which is currently producing the monoply output level and can credibly commit to producing this output in the future. Firm 2 is a potential entrant. These quantity-setting firms face the inverse market demand p= 89 -Q, where Q=q, +92. Each firm has a marginal cost of $37 per unit. Firm 2 has a fixed cost of entry of $125. Firm 2 will V the market and will earn a profit of $. (Enter a numeric response using an integer.)

There are two firms. Firm 1 is the incumbent, which is currently producing the monoply output level and can credibly commit to producing this output in the future. Firm 2 is a potential entrant. These quantity-setting firms face the inverse market demand p= 89 -Q, where Q=q, +92. Each firm has a marginal cost of $37 per unit. Firm 2 has a fixed cost of entry of $125. Firm 2 will V the market and will earn a profit of $. (Enter a numeric response using an integer.)

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 9CQ

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