Now suppose firm x undertakes a process innovation that reduces its marginal cost of production from $20 to $15. the fixed cost of undertaking this process innovation is f > 0. is this a tough commitment or a soft commitment? why? for what values of f would it makes sense for firm x to make this commitment?

Answers

Answer 1

Answer:

(A). It is a tough commitment.

(B). when the value of f is less or equal to 198.

Explanation:

So, we are given from the question above that;

=> there is reduction in the marginal cost of production from $20 to $15.

=> Also, the fixed cost of undertaking this process innovation is f > 0.

Recall that the demand functions is given as;

Qx = 80 – 2Px + Py. ------------------(**).

Qy = 80 – 2Py + Px a).---------------------(***).

Hence, if we Differentiate πx with respect to Ax we will have that;

(Px - 15) × (-2) + ( 80 - 2Px + Py) = 0. ----------------------------------------------------------(1).

=> 110 + Py = 4 × Px.

Solving for Py and Px using the Bertrand equilibrium gives;

Px = 37.3 and Py = 39.3.

If we slot in the values of Py and Px above into the demand function in equation (**) and (***) we will have;

Qx = 44.7 and Qy = 38.7.

Before innovation = (40 - 20) × 40. = 800

Then, (39.3 - 20) × 38.7 = 747.3 is the after innovation.

(37.3 - 15) × 44.7 - f.

=> 997.5 - f (after innovation).

The values of f would it makes sense for firm x to make this commitment when;

after innovation > before innovation.

997.5 - f > 800.

=>f is less or equal to 198.


Related Questions

Zoom In, Inc. is engaged in the business of coding, with an emphasis on Internet marketing, business apps, and intra-corporate networks. In all of Zoom In’s business activities, it is subject to United States laws and regulations. The basis for all law in the U.S. is _________.a. ​the U.S. Constitution.

b. ​the executive orders of the president.

c. ​each of the states' individual constitutions.

d. ​legislation enacted by Congress.

Answers

Answer:

Option A. The U.S. Constitution.

Explanation:

The reason is that the US constitution provides the basic framework for the laws to be formulated and passed both in the US National Assembly and the Senate. The laws cannot be formulated if the US constitution doesn't allows the passing of the law which means that the constitution must be amended first. When the slavery was to be eliminated in 1865, the first problem was that passing the elimination of slavery law was inconflict with the US constitution. So the constitution was amended before passing the law to eliminate the conflict.

In the nutshell, every law originates because of different reasons like Technological reasons, Social reasons, Cultural reason, etc) but the basis remains the same which is US constitution which is the basic framework for passing the law.

why is the leaf washed with distilled water​

Answers

To remove almost all of the sodium and minerals
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