4 Suppose market demand for mobile operators is expressed by Q=90-3P where Q is measured by calls in hours. There are three firms that supply the market: TRCell,VFone, and Avea .Avea provide hourly calls at a unit cost of 20$, where as TRCell& VFone has a unit cost equal to 10 Suppose firms are competing in price( no capacity constraints ) a) What is the market price? Why? b) How much does each firm sell in Bertrand equilibrium? c) What are firms’ profits? d)Is there any way for all firms to get higher profits
4 Suppose market demand for mobile operators is expressed by Q=90-3P where Q is measured by calls in hours. There are three firms that supply the market: TRCell,VFone, and Avea .Avea provide hourly calls at a unit cost of 20$, where as TRCell& VFone has a unit cost equal to 10 Suppose firms are competing in price( no capacity constraints ) a) What is the market price? Why? b) How much does each firm sell in Bertrand equilibrium? c) What are firms’ profits? d)Is there any way for all firms to get higher profits
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
4
Suppose market demand for mobile operators is expressed by Q=90-3P
where Q is measured by calls in hours.
There are three firms that supply the market: TRCell,VFone, and Avea
.Avea provide hourly calls at a unit cost of 20$, where as
TRCell& VFone has a unit cost equal to 10
Suppose firms are competing in
price( no capacity constraints )
a)
What is the market price? Why?
b)
How
much does each firm sell in Bertrand equilibrium?
c)
What are firms’ profits?
d)Is there any way for all firms to get higher profits
Transcribed Image Text:ave
▪ Suppose market demand for mobile operators is expressed G
by Q = 903P, where Q is measured by calls in hours.
• There are three firms that supply the market: TRCell,
VFone, and Avea.
▪ Avea provide hourly calls at a unit cost of 20-TL, where as
TRCell & VFone has a unit cost equal to 10-TL.
▪ Suppose firms are competing in price. (no capacity
constraint!)
a) What is the market price? Why?
b)
How much does each firm sell in Bertrand equilibrium?
c) What are firms' profits?
d) Is there any way for all firms to get higher profits?
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