MCAP Homework 1 Instructions: e This is a Group homework e While vou are free to discuss questions with your classmates, your submissions should be your own. Turned in solutions that look alike will be investigated and reported to HCC. e Maximum number of points is 130. 1. (15 points) A city is considering setting up a city-wide wireless network. We will analyze some considerations of how to roll out such a plan. The fixed cost of setting up the network is 500. Omnce the network is set up the cost of adding a user to the network, is 10 per user. Suppose further that the demand for wireless network is downward sloping and given by: P =510-qQ) Answer the following questions. Show your work. (a) (5 points) Suppose the rights to provide wireless service were given to one firm. What quantity will the firm choose to produce? What will be the firm's profit? (b) (5 points) Find the socially efficient quantity? () (5 points) A member of parliament suggests giving the rights to two firms. He be- lieves that competition will drive down the price to marginal cost. Do you support this suggestion? Explain your