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whipped whipped
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7 years ago
The following figure illustrates the marginal cost (MC) curves of two firms operating in the same industry. The marginal cost of Firm B is higher than the marginal cost of Firm A.



a)   What is the optimal output of each firm if the market price is $15?
b)   The government decides to shut down Firm B as it has a higher marginal cost than Firm A. If it does so, and asks Firm A to produce the combined output of firms A and B, will production be efficient? Explain your answer.
c)   How does the invisible hand work in such an industry?
Textbook 
Microeconomics

Microeconomics


Edition: 1st
Authors:
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losteinlostein
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