Three firms are bidding for the rights to provide cable television services. The demand for cable television is given by the equation P=100-Q. Firm 1 has an average cost of AC1 = 10, Firm 2 has an average cost of AC2 = 20, and Firm 3 has an average cost of AC3 = 30. If the rights are awarded using an English auction, approximately what is the resulting price and quantity of services provided? (A). P= 10; Q = 90.(B). P = 20; Q = 80.(C). P = 30; Q = 70.(D). P = 20; Q = 90.(E). P = 10; Q = 80.

Demand function : P = 100 - Q Firm 1 AC : AC1 = 10 Total Cost = 10 Q Firm 2 AC : AC 2 = 20 TC =…

Answered: Three firms are bidding for the rights…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter18: Auctions

Section: Chapter Questions

Problem 7MC

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Three firms are bidding for the rights to provide cable television services. The demand for cable television is given by the equation P=100-Q. Firm 1 has an average cost of AC¹ = 10, Firm 2 has an average cost of AC² = 20, and Firm 3 has an average cost of AC³ = 30. If the rights are awarded using an English auction, approximately what is the resulting price and quantity of services provided?

(A). P= 10; Q = 90.

(B). P = 20; Q = 80.

(C). P = 30; Q = 70.

(D). P = 20; Q = 90.

(E). P = 10; Q = 80.

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