Consider two internet service providers: ISP West and ISP East, offering internet access to a small town in north Kansas. They both have some estimations of the price elasticity of the demand facing them: Estimated Price Elasticity for ISP West: -1.25 Estimated Price Elasticity for ISP East:-1.125 They also have some estimations of their marginal cost, as defined by the monthly cost of adding one new unit (e.g., house, office, etc.) to their internet service network: Estimated Marginal Cost for ISP West: $23 Estimated Marginal Cost for ISP East: $30 Assuming that ISP West and ISP East engage in a Cournot duopoly, the profit maximizing price for ISP West is _____ dollars.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter14: Pricing Techniques And Analysis
Section: Chapter Questions
Problem 1E
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Consider two internet service providers: ISP West and ISP East, offering internet access to a small town in north Kansas. They both have some estimations of the price elasticity of the demand facing them: Estimated Price Elasticity for ISP West: -1.25 Estimated Price Elasticity for ISP East:-1.125 They also have some estimations of their marginal cost, as defined by the monthly cost of adding one new unit (e.g., house, office, etc.) to their internet service network: Estimated Marginal Cost for ISP West: $23 Estimated Marginal Cost for ISP East: $30 Assuming that ISP West and ISP East engage in a Cournot duopoly, the profit maximizing price for ISP West is _____ dollars.

 

 

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