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Unformatted text preview: I ) in Logeta, CA. Right next to it an engineering company produces gadgets ( G ). They act as competitive rms, with the university taking the price of p I = 2 and the engineers taking the price p G = 3. The respective cost functions of the rms are c I ( I ) = I 2 / 4 and c G ( G,I ) = G 2 / 8 I . If each rm operates independently, will the market provide too many or too few ideas? You will only be given credit for a correct answer if you write down expressions showing how the marginal private cost of I diers from the the marginal social cost. Too many ideas Too few ideas (circle one) MPC I = and MSC I =...
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This note was uploaded on 05/08/2011 for the course ECON 100B taught by Professor Kilenthong during the Spring '08 term at UCSB.
- Spring '08