Table 17-4

question 325

Multiple Choice

Table 17-4. The information in the table below shows the total demand for high-speed Internet subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $200,000 (per year) and that the marginal cost of providing an additional subscription is always $80.

-Refer to Table 17-4.Assume that there are two profit-maximizing high-speed Internet service providers operating in this market.Further assume that they are not able to collude on the price and quantity of subscriptions to sell.How much profit will each firm earn when this market reaches a Nash equilibrium?

• A) $120,000
• B) $150,000
• C) $200,000
• D) $225,000

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Definitions:

Curvilinear Regression

A form of regression analysis in which the relationship between the independent variable and the dependent variable is modeled as an nth degree polynomial.

Specific Risk

A type of risk that affects a very small number of assets, such as a single stock or sector, also known as unsystematic or idiosyncratic risk.

Beta

In finance, it's a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. In statistics, it refers to the second type of error in a hypothesis test.

Regression Models

Statistical models used to estimate the relationship between a dependent variable and one or more independent variables.