Homework Help is Here – Start Your Trial Now!
Business
Economics
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
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
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
Transcribed Image Text: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
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Monopoly
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS