A telecom operator is considering deploying fiber in downtown Boston. The expected average fixed cost per home is $700.

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A telecom operator is considering deploying fiber in downtownBoston. The expected average fixed cost per home is $700. Themonthly demand for residential fiber in the city has been estimatedto be given by q(p) = 180 − 2p , where q is expressed in thousandsof households and p is the price (or charge) per month. Theoperator estimates a marginal cost of $20 per month for eachconsumer served.
Compute the size of the market (quantity of householdsthat would subscribe service at price 0). Compute total fixed costsassuming that the telecom operator would then build a network tocover all households in the market.
Without competition in the market, what price would thistelecom operator charge per month for Internet access?