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

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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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.
Transcribed Image Text: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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