Am I answering this question correctly? Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services, the company'smarginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.PRICE (Dollars per subscription)1009080706050403020100+0---+2Pricing MechanismProfit Maximization4Marginal-Cost PricingAverage-Cost Pricing-*☆610 12 14QUANTITY (Thousands of subscriptions)O TrueMO FalseComplete the first row of the following table.MR813, 35Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints.16Complete the second row of the previous table.Complete the third row of the previous table.ATCMC18 20Short RunPriceQuantity(Subscriptions) (Dollars per subscription)7,00065 ▼14,00013,000D3030 ▼3535 ▼Suppose that the government forces the monopolist to set the price equal to marginal cost.(?)Suppose that the government forces the monopolist to set the price equal to average total cost.ProfitPositiveNegativeZeroTrue or False: Under the average-cost pricing policy, the cable company has no incentive to cut costs.Long-Run DecisionStay in business ▼Exit the industryStay or exit

A monopoly refers to that market scenario which consists of a single seller and the optimal…

Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services, the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. 100 90 (?

Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services, the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. 100 90 (?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Am I answering this question correctly?

Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services, the company's
marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.
PRICE (Dollars per subscription)
100
90
80
70
60
50
40
30
20
10
0
+
0
---
+
2
Pricing Mechanism
Profit Maximization
4
Marginal-Cost Pricing
Average-Cost Pricing
-*
☆
6
10 12 14
QUANTITY (Thousands of subscriptions)
O True
M
O False
Complete the first row of the following table.
MR
8
13, 35
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints.
16
Complete the second row of the previous table.
Complete the third row of the previous table.
ATC
MC
18 20
Short Run
Price
Quantity
(Subscriptions) (Dollars per subscription)
7,000
65 ▼
14,000
13,000
D
30
30 ▼
35
35 ▼
Suppose that the government forces the monopolist to set the price equal to marginal cost.
(?)
Suppose that the government forces the monopolist to set the price equal to average total cost.
Profit
Positive
Negative
Zero
True or False: Under the average-cost pricing policy, the cable company has no incentive to cut costs.
Long-Run Decision
Stay in business ▼
Exit the industry
Stay or exit

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