Average cost curve of small firms

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Reference no: EM138687

Q. Consider a market consists of a dominant rm producing the majority of the market supply and large number of small firms acting as competitive firms (dominant rm model). Assume the Environmental Protection Agency sets new requirements that raise the fixed costs of reporting compliance with pollution control rules. How would this change affect the market price, the number of small firms, total output and the dominant firm's share of the market? What does an increase in fixed costs due to the average cost curve of small firms?

Reference no: EM138687

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