Suppose we have an industry with two firms producing the same product. Acme Corporation produces 19,000 units, while Zoltar Corporation produces 1,000 units. The price in the market is $20, and both firms have marginal costs of production of $5. What incentives do the two firms have to lower prices as a way of trying to get consumers to switch to the firm from which they are not currently purchasing? Which firm is more likely to lower its price?
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