Given:
Verizon
Total cost = $23 billion
Opportunity cost of capital = 10%
Annual cost = $2.3 billion
Expected demand = q = 2,100,000 – 6P
AT&T
Total cost = $4.6 billion
Opportunity cost of capital = 10%
Annual cost = $460 million
Expected demand = q = 425,000 – 60P
1. Calculate the expected annual profit that Verizon will earn
if they price at service at $30/month, $60/month or $100/month. At
which price do they maximize profit?
2. Calculate...