
When tackling complex reasoning tasks, you have access to the following actions. Use them as needed to progress through your thought process.

[ASSESS]

[ADVANCE]

[VERIFY]

[SIMPLIFY]

[SYNTHESIZE]

[PIVOT]

[OUTPUT]

You should strictly follow the format below:

[ACTION NAME]

# Your action step 1

# Your action step 2

# Your action step 3

...

Next action: [NEXT ACTION NAME]


system
Consider a consumer who plans to use a coffee machine. Assume the consumer lives over two periods and values the benefit of using the coffee machine at 20 monetary units in each period. Coffee machines can be of two types: durable ones, which last for two periods, and low-quality ones, which completely break down at the end of each period. It is known that the technology for producing a durable machine allows them to be made at a constant average cost of 12 monetary units. Low-quality coffee machines can be produced at a constant average cost of S monetary units.

(a) Assume coffee machines are produced only by a monopoly. At what average cost S will the monopoly produce only durable coffee machines?

(b) How would your answer to part (a) change if coffee machines of both types are produced in a perfectly competitive market?

(c) What conditions affecting the choice of the coffee machine's service life have we not considered? Come up with at least one and explain how its inclusion in the model would affect the choice outcome under the conditions of parts (a) and (b).

Present the answer in LaTex format: \boxed{Your answer}
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