A monopolist (AT&T) is facing the following demand schedule P=24-3Q. That is, Q=0 implies P=24, then Q=1
implies P=21, and Q=2 implies P=18, and so one. Fixed costs will be neglected in this analysis. The marginal cost is constant and equal to 6 for every unit produced.
How do I find the quantity produced and the amount of maximum profits?
How do I find the Price and quantity to yield the efficient solution?
How do I find what happens if a new competitor called Vodafone enters the market and the marginal cost of Vodafone is constant and always equal to 5? I mean, in this latter case could you tell us the Nash equilibrium?
The efficient solution is the one where profits are maximized i.e. at 2 units of... View the full answer