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.How much profit will each firm earn when this market reaches a Nash equilibrium
A)$0
B)$140,000
C)$170,000
D)$220,000

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.How much profit will each firm earn when this market reaches a Nash equilibrium
A)$0 
B)$140,000 
C)$170,000 
D)$220,000

Quizplus · Accepted Answer

Each firm will earn a profit of $140,000 when the market reaches a Nash equilibrium. This is because each firm will produce the quantity of output that maximizes its profit, given the output of the other firm. In this case, each firm will produce 100 units of output, and the market price will be $200. Each firm's total revenue will be $20,000, and its total cost will be $60,000. Therefore, each firm's profit will be $140,000.

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