Unformatted text preview: I ) in Logeta, CA. Right next to it an engineering company produces gadgets ( G ). They act as competitive ﬁrms, 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 ﬁrms are c I ( I ) = I 2 / 4 and c G ( G,I ) = G 2 / 8-I . If each ﬁrm 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 diﬀers from the the marginal social cost. Too many ideas Too few ideas (circle one) MPC I = and MSC I =...
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- Fall '08
- Economics, marginal social cost, Econ 100B Winter, respective cost functions