Refer to the information in Scenario 8.1, if Fizzle and Sizzle sell the same output at the same price and are otherwise identical, Fizzle's profit will be: higher than Sizzle's by $500,000 yearly.
Because Fizzle is farther upstream and gets cleaner water, so its
cost of purifying water for use in soft drinks is lower than that
of Sizzle's by $500,000 yearly. Both are selling the same output at
the same price. So the profit will be nearly same. As the cost of
purifying water for Fizzle is lower than that of Sizzle by $500,000
yearly, no doubt Fizzle's profit will be higher than Sizzle's by
$500,000 yearly. Fizzle gets extra advantage of $500,000 yearly
which is a gain for him.
QUESTION 30 Scenario 8.1: Two soft-drink firms, Fizzle & Sizzle, operate on a river. Fizzle is...
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