This preview shows page 1. Sign up to view the full content.
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 =...
View Full Document
- Fall '08