1. The Izzi company is competing with the Totalplay company for the market of people who hire their triple packages (cable, telephone and internet) simultaneously.

Let q₁ and q₂ be the quantities of a homogeneous product produced by the Izzi and Totalplay companies, respectively.

Let P(Q)=1600-Q be the market price (the inverse demand equation)

Where: Q=q₁+q₂ Let C(q_i )=100q_i for all i=1,2

• How many packages will each company offer if they are competing simultaneously?
• What is the total amount received by the market and what is the market price?
• What are the profits of the two companies?

If Izzi and Totalplay can behave like a monopoly,

• how many packages do they offer now?
• What is the total market quantity and the new price?
• What are the profits of these companies?

If Totalplay were the leading company and Izzi the follower,

• how many packages does Izzi offer and how many Totalplay?
• What is the total market quantity and the new price?
• What are the profits of the two companies?

Which of the 3 types of markets do you think is better? Explain your answer.

2. The airline Volaris and the Aeromexico airline are fighting for the market. Both are looking at the ideal number of seats to offer.

Let q_1 and q_2 be the quantities of a homogeneous product produced by the companies Volaris and Aeromxico, respectively.

Let P(Q)=2500-Q be the market price (the inverse demand equation)

Where: Q=q₁+q₂ Let C(q_i )=500q_i for all i=1,2

How many seats will each company offer if they are competing simultaneously? What is the total amount received by the market and what is the market price? What are the profits of the two companies?

If Aeromxico were the leading company and Volaris the follower,

how many seats would each offer?

What is the total market quantity and the new price?

What are the profits of the two companies?