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Equilibrium price trajectory

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Reference no: EM133251995

A. For what value of g does the backstop cost reach 5 att = 40? B.

B. Suppose that g is slightly lower than the value you identified in part (a). How, if at all does this alter the equilibrium price trajectory (the solid curve) in Figure 7.1? Explain your reasoning.

Reference no: EM133251995

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