Question

Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero. How would this affect the incentive of Ajinimoto to act noncooperatively and change its output?

Answer 1

Ajinomoto will likely not have an incentive to increase or change its output of MSG.

Step-by-step explanation:

Remember, marginal cost focuses on the increase in cost additional unit of a product. Therefore, based on the limited information provided, Ajinomoto's decision will likely be based on it's market share. If the marginal cost equals zero, and it has more of the market share it will likely not influence them to change or increase their output.