The LXM firm, therefore, increases quality in response to an increase in fixed cost whenever [[pi].
Thus, an upward shift in demand unambiguously reduces the LXM firm's output.
Thus, regarding quality and quantity, the LXM and PM firms react differently to an upward shift in demand.
It is immediately apparent that the simultaneous solution to the LQM firm's problem is directly analogous to the LXM firm's, with quality and quantity exchanging roles and with [[pi].
and the LQM firm, like the LXM firm, produces a lesser quantity of a lower quality product than its PM twin.
Differences between the LXM and LXQ optima also depend on the [[pi].
Thus, when consumers are unwilling to bear the cost of improved quality and there is an exogenous upward shift in demand, the LQM and LXM firms' behaviors depart.
More positively, it can be concluded that the LXQM firm produces a smaller quantity of a higher quality product than the LQM firm and a larger quantity of a lower quality product than the comparable LXM firm.
The behaviors of the LXM, LQM, and LXQM firms, relative to the PM firm and to each other, are summarized in Table 1.