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Question: consider a firm faced with the following pricing problem there...

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Consider a firm faced with the following pricing problem. There is free entry and average economic costs are $50 at 20 units and $35 at 40 units. At any volume, it costs the firm an additional $10 per unit to product and market a superior version of the product. Assume that any fixed costs of marketing two products instead of one are negligible. Forty consumers per period are interested in its product. Half of them are price insensitive and want the superior version of the product even if they have to pay $50 per unit. The other half are price sensitive and want the basic version of the product but will pay no more than $30 per unit. In what version and at what price should the firm sell the product?

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