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Please indicate the correct answer and explain why. Also, graph as instructed with labels. Thank you

Read Eye on the Wireless Oligopoly. Explain the effects of economies of scale and demand on the market for smartphone plans and illustrate it with a graph. Economies of scale and demand in the market for smartphone plans means that Price (dollars per smartphone plan) OA. the two largest firms have much bigger gross profits than the two smaller firms B. eventually all fims will share the market equally O C. in the long run, the market will be efficient O D. we should not expect new firms to enter the market 400 The figure illustrates the market demand for smartphone plans. Suppose the least-possible cost of producing an annual smartphone plan is $250 and that the efficient scale is 500,000 smartphone plans Draw the average total cost curve. Label it ATC 200 Quantity (millions of smartphone plans) >Draw only the objects specified in the question.

Verizon (33%) Your smartphone plan is almost cer- tainly with one of four firms: Verizon, AT&T, Sprint, or下Mobile. The pie that profit information to get an indi- rect look at economies of scale Sprint ( 16%) chart in Figure I shows the four firms market shares along with that of a token fifth firm, U.S. Cellular. The pie chart in Figure 2 shows the gross earnings of the four wireless firms. (Gross means before deducting depreciation.) With a third of the market each, T-Mobile ( 16%) Verizon and AT&T are the dominant players, but sharing almost equally the other Mathway | Precalculus Problem Solver also significant participants in what is a wireless service oligopoly Because of economies of scale the two larger firms have much big ger gross profits than the two smaller firms. But the two smaller firms are large enough to earn a profit. With the two smaller firms being proficable,Verizon ($28B) and with each having about a one- sixth market share, it seems likely that U.S. Cellular ( 1 %) AT&T (34%) Figure I Wireless Subscriber Shares Does this market have enough firms? Is four too few? Would con- sumers be better served if more firms demand in the U.S. wireless market is entered the market? T-Mobile ($4B) large enough for more than four firms to profitably survive. e number of firms that a market Sprint ($5B) can support depends on the extent of its economies of scale and the market demand. We dont have data on the firms long-run average cost curves that would tell us about the economies If more firms could operate profit- ably in this market, we should expect to see entry. And that is exactly whatAT&T ($208) is happening. Google, in collaboration with Dish Network, is entering with a Figure 2 Wireless Gross Profitof scale, but we do have information about the firms profits, We can use virtual wireless service. There might be room for even more firms SOURCES OF DATA: Statista.com and Forbes.com.

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