F. Market for Cable Television The City of St. Francisville is considering a proposal to award an exclusive contract to Clear Vision, Inc., a cable television carrier. City planners have estimated that the demand, marginal revenue, total cost, and marginal cost functions for cable television are as follows: P=28 -0.0008Q MR = 28 -0.0016Q TC = 120,000+ 0.00062 Q2 MC = 0.0012Q, where Q = the number of cable subscribers and P = the price of basic monthly cable service. You were hired as an economic consultant to the City Planning office and are asked to answer the questions listed below. a. What price and quantity would be expected if the firm is allowed to operate as a monopoly? b. What price and quantity of cable television would you recommend as being socially efficient? Use economic theory to justify your answer. c. Compare the economic efficiency implications of a) and b) above. Explain briefly which is the better alternative from society's perspective.

F. Market for Cable Television The City of St. Francisville is considering a proposal to award an exclusive contract to Clear Vision, Inc., a cable television carrier. City planners have estimated that the demand, marginal revenue, total cost, and marginal cost functions for cable television are as follows: P=28 -0.0008Q MR = 28 -0.0016Q TC = 120,000+ 0.00062 Q2 MC = 0.0012Q, where Q = the number of cable subscribers and P = the price of basic monthly cable service. You were hired as an economic consultant to the City Planning office and are asked to answer the questions listed below. a. What price and quantity would be expected if the firm is allowed to operate as a monopoly? b. What price and quantity of cable television would you recommend as being socially efficient? Use economic theory to justify your answer. c. Compare the economic efficiency implications of a) and b) above. Explain briefly which is the better alternative from society's perspective.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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