You Are a Potential Entrant into a Market That Previously $\mathbf { Q } = \sum _ { \mathbf { i } = 1 } ^ { \mathbf { n } } \mathbf { Q } _ { \mathbf { i } }$

question 122

Essay

You are a potential entrant into a market that previously has had entry blocked by the government.Your market research has estimated that the inverse market demand curve for this industry is P = 22,500 - 75Q,where
$\mathbf { Q } = \sum _ { \mathbf { i } = 1 } ^ { \mathbf { n } } \mathbf { Q } _ { \mathbf { i } }$ .You estimate that if you enter the market,your own cost function will be C_y(Q_y)= 15,300Q_y .The government has invited your firm to enter the industry,but it will require you to pay a one-time license fee of $100,000.You do not know the cost functions of the firms currently in the market; however,the price is now $16,000.Last year 87 units were sold by existing firms.Would you choose to enter this market?

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