Question

At&t is the dominant firm in the local telecommunication industry, which has a total market demand given by Q = 100 - 2P. AT&T has competition from a fringe of four small firms that produce where their individual marginal costs equal the market price. The fringe firms each have total costs given by TCi = 10 Qi + Qi^2. If AT&T's total costs are given by TCa = 10 + 10 Qa, how much does the industry as a whole produce at this price?

Answers:

60

40

80

20

100

Answer 1

Option 1) 60

od = 100-2P, OS Q Res Mga = lo 10000VA, Ti = 109 + 9 i ² Mei= 10+2 q i q= (P-10)/2 then supply of fringe fimos , total, 95 = 495 = (4/2) (P-10) & P-20 # Residual dd arve of dominant from, Qd_QS = 100-QP-2P + 20 ores 120-4P P= (120-0)/4, MR = (120-20)/4 at eqm MR=MC = 10 00 000 den (120-20)/4 1000 120 - 20 = 40 totoo 80 = 20 Q = 40 P = 80/4=20. How supply of fringe froms Os = ap-20, 89 = 40-20 - 20. total supply = 40 +20 Ang option 1) 4 = 9 # = 60