Table 17-2
The information in the table depicts the total demand for wireless Internet subscriptions in a small urban market. Assume that each wireless Internet operator pays a fixed cost of $100,000 (per year) to provide wireless Internet in the market area and that the marginal cost of providing the wireless Internet service to a household is zero.

-Refer to Table 17-2.Assume that there are two profit-maximizing wireless Internet companies operating in this market.Further assume that they are not able to "collude" on price and quantity of wireless Internet subscriptions to sell.What price will wireless Internet subscriptions be sold at when this market reaches a Nash equilibrium
A)$60
B)$90
C)$120
D)$150

Question

Table 17-2
The information in the table depicts the total demand for wireless Internet subscriptions in a small urban market. Assume that each wireless Internet operator pays a fixed cost of $100,000 (per year) to provide wireless Internet in the market area and that the marginal cost of providing the wireless Internet service to a household is zero.

-Refer to Table 17-2.Assume that there are two profit-maximizing wireless Internet companies operating in this market.Further assume that they are not able to "collude" on price and quantity of wireless Internet subscriptions to sell.What price will wireless Internet subscriptions be sold at when this market reaches a Nash equilibrium
A)$60 
B)$90 
C)$120 
D)$150

Quizplus · Accepted Answer

In a Nash equilibrium, firms choose their best strategy given the strategies chosen by other firms. Without collusion, they will compete, leading to a lower price. $60 is likely the competitive price where neither firm can benefit by changing their strategy.

Table 17-2 the Information in the Table Depicts the Total Demand for Demand