Consider a market with one large firm and many small firms. The supply function of all of the small firms together is S(p) = 200 + p, the market demand curve is D(p) = 400 - p, and the cost function for the large firm is C(y) = 20y. The residual demand curve for the large firm, where DL is the large firm's demand and yL is the large firm's output, is
A) DL(p) = 400 - 21yL.
B) DL(p) = 200 - 2p.
C) DL(p) = 600 - 2p.
D) DL(yL) = 200 - 2p - 20yL.
E) DL(yL) = 200 + p + 20yL.
Correct Answer:
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