1. AT&T and Verizon have two pricing strategies: Set a high

(monopoly) price or set a low (competitive) price. Suppose that if they both set a competitive price, economic profit for both is zero.

If they both set a monopoly price, AT&T makes an economic profit of $100 million and Verizon makes an economic profit of

$200 million. If AT&T sets a low price and Verizon sets a high price, AT&T makes an economic profit of $200 million and