Value Gap Advantage, Added Value, Excluded Customers & Profitability

1. Can you make a profit? How? You operate in a market with the following characteristics.

There are FOUR customers with a WTP for your firms' product of 150, 140, 130 and 120 respectively.

You and Firm Alpha are the only two suppliers with a total capacity of THREE units of the product. You have a capacity of ONE unit and your average cost is $90 while Firm Alpha has a VGA over you of $20 or has a unit manufacturing cost of $70. Firm Alpha can manufacture at most TWO units.

In an unrestricted market, can you expect to make a profit since you are the inefficient producer. What is the range of profits that Firm Alpha and every player in the game can hope to make? The result is, at first look, counterintuitive. Give me a verbal description of why this outcome is true?