(2). Revisit pages 188-190 of the text with a model that shows firm performance in a single market integrated market. Th

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2 Revisit Pages 188 190 Of The Text With A Model That Shows Firm Performance In A Single Market Integrated Market Th 1 (76.98 KiB) Viewed 16 times

(2). Revisit pages 188-190 of the text with a model that shows firm performance in a single market integrated market. Then assume a new technology becomes available. Any firm can adopt the new technology, but its use requires an additional fixed-cost investment. The benefit of the new technology is that it reduces a firm's marginal cost of production by a given amount. Could it be profit maximizing for some firms to adopt the new technology but not profit maximizing for other firms to adopt that same technology? Which firms would choose to adopt the new technology? How would they be different from the firms that choose not to adopt it? [Hint: Cost without Technology = TC = CQ + F (c = marginal cost); Cost with Technology = TC* = CTQ + F + T (T= new Technology, CT=marginal cost with new technology. A firm will choose to adopt this technology whenever TC* < TC. Substitute and re- arrange] [maximum 1/2 page, 30 points].