There Are Two Existing Firms in the Market for Computer

question 140

Multiple Choice

There are two existing firms in the market for computer chips.Firm A knows how to reduce the production costs for the chip and is considering whether to adopt the innovation or not.Innovation incurs a fixed setup cost of C,while increasing the revenue.However,once the new technology is adopted,another firm,B,can adopt it with a smaller setup cost of C/3.If A innovates and B does not,A earns $30 in revenue while B earns $10.If A innovates and B does likewise,both firms earn $20 in revenue.If neither firm innovates,both earn $10.Under what condition will firm B have an incentive to adopt if firm A adopts the innovation?

• A) C > 30
• B) C < 30
• C) 10 > C > 0
• D) 35 > C > 25

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Definitions:

Emulsify Fats

The process of breaking down fats into smaller droplets, typically by the action of bile acids, to make them easier to digest.

Bile Salts

Components of bile, which aid in the digestion and absorption of fats in the small intestine by emulsifying fats.

Micelles

Aggregates of surfactant molecules dispersed in a liquid colloid, forming a structure with a hydrophilic (water-attracting) exterior and a hydrophobic (water-repelling) core.

Digested Lipids

These are lipids that have been broken down by the digestive process into smaller molecules, such as fatty acids and glycerol, for absorption and use by the body.