QUESTION 8Consider an industry in which the productiontechnology yields the cost function C(Q)=1800+(3Q)².What is the threshold value for Q below which this costfunction is sub-additive?If necessary, use two decimal places for your answerrounding up the second decimal place, eg 87.65instead of 87.646. A telecom incumbent owns the upstream network and iscurrently a monopoly retail supplier.The incumbet has fixed cost of F=1.4 and marginal costof co=0.3 per call for its upstream network.The incumbent's retail marginal cost of a call c₁.25 andits retail price is fixed p₁=0.75.Give the Efficient Component Pricing Rule (ECPR)rate of access to the incumbent's network.If applicable, give up to two decimal places rounding upthe second decimal place, eg use 87.65 instead of87.647.

Assessing both expenses and earnings is essential when setting reasonable rates for products and…

Consider an industry in which the production technology yields the cost function C(Q)=1800+(3Q)². What is the threshold value for Q below which this cost function is sub-additive? If necessary, use two decimal places for your answer rounding up the second decimal place, eg 87.65 instead of 87.646.

Consider an industry in which the production technology yields the cost function C(Q)=1800+(3Q)². What is the threshold value for Q below which this cost function is sub-additive? If necessary, use two decimal places for your answer rounding up the second decimal place, eg 87.65 instead of 87.646.

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Chapter1: Making Economics Decisions

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Problem 1QTC

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Question

A telecom incumbent owns the upstream network and is
currently a monopoly retail supplier.
The incumbet has fixed cost of F=1.4 and marginal cost
of co=0.3 per call for its upstream network.
The incumbent's retail marginal cost of a call c₁.25 and
its retail price is fixed p₁=0.75.
Give the Efficient Component Pricing Rule (ECPR)
rate of access to the incumbent's network.
If applicable, give up to two decimal places rounding up
the second decimal place, eg use 87.65 instead of
87.647.

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