Question

Read the news clip and then answer the following question. ?AT&T is the exclusive provider of...

Read the news clip and then answer the following question.

?AT&T is the exclusive provider of wireless service for the iPhone.

As a? result, ______.

A.

demand for wireless service decreases

B.

competition in the wireless market increases

C.

the price of wireless service is higher and the quantity of iPhone services provided is smaller than it otherwise would be

D.

demand for wireless service increases

?AT&T: A monopoly with? iPhone?

?AT&T is the exclusive carrier for? Apple's iPhone. Americans who buy an iPhone cannot unlock it and use another wireless carrier.

Business   Economics   
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Homework Answers

Answer #1

Answer : C is the correct option.

Because AT&T is an exclusive wireless service provider of iphone in America. This means here AT&T is a single wireless service provider in America. This also means here that AT&T has the monopoly power in the market as AT&T is a single wireless service provider in the market and a monopolist always charge higher price level on smaller quantity level. As AT&T is a monopolist in American market, AT&T charges higher price on smaller quantity level in comparison to other market structure. Therefore, the option C is correct.

According to the given information, Americans choose another wireless carrier if they are not able to unlock an iphone. This means competitors of AT&T exist in the market for iphone. In this situation AT&T is not a monopoly for iphone in the market of America.

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