
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 planning to use a coffee machine. Assume the consumer lives for two periods and values the benefit from using the coffee machine at 10 monetary units in each period. Coffee machines can be produced in two types: durable, lasting for two periods, and low-quality, breaking down completely at the end of each period. It is known that the technology for producing a durable machine allows them to be produced with constant average costs of 6 monetary units. Low-quality coffee machines can be produced with constant average costs of C monetary units.

(a) Suppose coffee machines are produced only by a monopoly. At what average costs C will the monopoly produce only durable coffee machines?

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

(c) What conditions for choosing the lifespan of a coffee machine have we not considered? Think of at least one and explain how including it in the model would affect the choice outcome under the conditions in parts (a) and (b).

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