Firms product provides the greatest value-created.

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Reference no: EM1321702

Q. Two firms, Alpha also Beta, are competing in a marketplace in elucidate which consumer preferences are identical. Alpha offers a product whose benefit B is equal to $75 per unit. Alpha's average cost C is equal to $60 per unit, while Beta's average cost is equal to $50 per unit.

(a) Elucidate which firm's product provides the greatest value-created?

(b) In an industry equilibrium in elucidate which the firms achieve consumer surplus parity, by illustrate what dollar amount will the profit margin, P - C, of the firm that creates the greatest amount of value exceed the profit margin of the firm that creates the smaller amount of value? Compare this amount to the difference among the value-created of each firm. Illustrate what explains the relationship among the difference in profit margins also the difference in value-created among the two firms?

Reference no: EM1321702

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