Answer Happy

There are two mobile phone firms operating in a market; FF (Firm
1) and Wodaphone (Firm 2). The market demand is 𝑃𝑃 = 75 − 0.5(𝑄𝑄1 +
𝑄𝑄2). The total costs for the two firms are 30𝑄𝑄1 and 30𝑄𝑄2. (a) If
either FF or Wodaphone enjoyed a monopoly position in this market,
what level of output would they produce? (b) Using a diagram, fully
labelled, describe how the equilibrium outputs for the two firms
are determined and solve mathematically for this solution. (c) The
CEO of FF meets with her counterpart at Wodaphone and suggests that
the two firms each produce 22.5 units. The CEO of Wodaphone accepts
this suggestion. Why did the CEO of FF make this suggestion, and
why did her counterpart at Wodaphone agree? Show this outcome on
your diagram in (b). (d) After keeping to this agreement for 12
months, the CEO of Wodaphone notices that FF is actually producing
more than 22.5 units. Why is FF doing this? Illustrate this on your
diagram in (b). What action can Wodaphone take against FF