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A firm in a perfectly competitive market invents a method of production that lowers marginal costs. What happens to output? What happens to the price it charges?
A. The firm has an employee who threatens to tell all other firms in the industry about how to implement this new technique. Will it be possible to bribe this employee not to do this? Explain why or why not.
B. Why should the employee choose to tell only some of the other firms rather than all of them?
C. What factors will determine the best number of firms to sell the secret to?
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Suppose there are two technologies for producing steel. Under technology A, a firm's short-run total cost function is STCa(q)=1/2q^2+100q+10 with SMCa(q)=q+100, and using technology B it is STCb(q)=2q^2+6 with SMCb(q)= 4..
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If the CPI equaled 1.30 in 1990, 1.69 in 2000, and the nominal income of agricultural workers was $35,000 in 2000, what was the average nominal income of agricultural workers in 1990?
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Discuss are a good thing since they transfer resources from lower rated to higher rated activities thereby helping to maximize society's happiness?
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