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(Solved): You are the manager of ABC SOLAR, a firm that operates as a monopolist in the production of patented ...



You are the manager of ABC SOLAR, a firm that operates as a monopolist in the production of patented state-of-the-art solar panels for residential consumers. Analysts have determined that the inverse market demand for ABC’s solar panels is P = 8500 ? Q. The firm produces at a marginal cost of $500 per solar panel. Now suppose that the Director of R&D at ABC has informed you that, with an additional investment of $200,000 to improve production efficiency, your marginal costs can be reduced from $500 to $400 per solar panel. Should this investment be made? Explain fully.



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