Suppose Two Firms, FastNet and SmartCast Are the Only Fast

question 148

Multiple Choice

Suppose two firms, FastNet and SmartCast are the only fast Internet providers in a city. They have identical costs and one firm's service is a perfect substitute for the other's. The industry is a natural duopoly. Suppose that FastNet and SmartCast collude and agree to share the market equally. In this scenario, in Nash equilibrium,

• A) both firms cheat to produce less than the agreed amount.
• B) one firm complies with the agreement while the other cheats to produce more than the agreed amount.
• C) both firms cheat to produce more than the agreed amount.
• D) both firms comply with the agreement.

Understand the methods companies use to finance asset purchases.

Acknowledge the role and function of a mutual fund.

Identify the world's largest stock exchange and understand its significance.

Comprehend the value and pricing determinants of financial assets.

---

Definitions:

Present Value

The present value of an anticipated amount of money or sequence of financial inflows, discounted by a particular return rate.

Payments

Amounts of money that are paid or due to be paid by one party to another for goods provided, services rendered, or debt obligations.

Compounded Quarterly

The process of calculating interest on a principal amount at a specified interest rate, with the interest being added to the principal at the end of every three months.

End-Of-Quarter Payments

Payments that are made at the end of each quarter, typically in a financial or leasing agreement.