In the Dixit-Spence model, we assume that the marginal cost of producing gadgets depends on the

Question

Quizplus · Accepted Answer

In the Dixit-Spence model, the marginal cost of producing gadgets depends on the amount of production capacity a firm has. This is because firms incur increasing marginal costs as they produce more gadgets and exhaust their production capacity. Therefore, the marginal cost curve increases as the level of production approaches the firm's production capacity.

In the Dixit-Spence Model, We Assume That the Marginal Cost