Apple sold its iPhone to AT T, which in turn sold it to the final consumers Suppose that the consumers constant elasticity demand function for the iPhone was Q Ap , Apples marginal cost of production was m, and AT Ts marginal cost of reselling the phone was c If both Apple and AT T were monopolies ...

If ATT is a monopoly it sets its price where marginal rev ...

Apple sold its iPhone to AT&T, which in turn sold it to the final consumers. Suppose that

Question:

Apple sold its iPhone to AT&T, which in turn sold it to the final consumers. Suppose that the consumers’ constant elasticity demand function for the iPhone was Q = Ap^-ε , Apple’s marginal cost of production was m, and AT&T’s marginal cost of reselling the phone was c. If both Apple and AT&T were monopolies and set prices independently, what price would they set? If they were to have merged, what price would they have set?

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