If it's expected that the incomes of people living in rural Nigeria is expected to increase, what will the equilibrium outcome be, ceteris paribus?
If it's expected that the incomes of people living in rural Nigeria is expected to increase, what will the equilibrium outcome be, ceteris paribus?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Question 18
Suppose that the pricing strategies for FiberOne and of Starlink are shown in the table below. They
have to decide whether to charge a high or low price for their internet service. The four pairs of payoff
values show what each company expects to earn or lose in millions of dollars, depending on what the
other company does.
Starlink's
Price
Strategy
High Price
Low Price
FiberOne's Price Strategy
Low Price
High Price
Starlink+$200 FiberOne +$200
Starlink-$100 FiberOne +500
a)-3
b) 0
c) 2.5
d)-0.55
Starlink+$500
FiberOne-$100
Starlink+$100 FiberOne +$100
If it's expected that the incomes of people living in rural Nigeria is expected to increase, what will the
equilibrium outcome be, ceteris paribus?
a) Starlink will charge a low price; FiberOne will charge a high price.
b) Starlink will charge a high price; FiberOne will charge a low price.
c) Both Starlink and FiberOne will charge a low price.
d) Both Starlink and FiberOne will charge a high price.
Question 19
Which of the following figures is most likely to represent the cross-price elasticity of demand of
FibreOne internet services to Starink internet services.
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Follow-up Question
If the average rural household income in Nigeria is US$60 then the demand for internet
connectivity, ceteris paribus, at US$43 is more likely to be...
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