What is the maximum amount the firm could afford to spend


In the preceding question, prior to being able to outsource, imagine that the supplier is concerned about entry, and must spend $2,000 in lobbying to maintain her position as a monopolist.

(a) Can the firm still make a profit?

(b) What is the maximum amount the firm could afford to spend on lobbying with the objective of maintaining the monopoly position?

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Econometrics: What is the maximum amount the firm could afford to spend
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