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omplete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal Cost Pricing Average Cost Pricing ppose that the government forces the monopolist to set the price equal to marginal cost. omplete the second row of the previous table. uppose that the government forces the monopolist to set the price equal to average total cost. omplete the third row of the previous table. ue or False: Under the average cost pricing policy, the cable company has no incentive to cut costs. True O False

omplete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal Cost Pricing Average Cost Pricing ppose that the government forces the monopolist to set the price equal to marginal cost. omplete the second row of the previous table. uppose that the government forces the monopolist to set the price equal to average total cost. omplete the third row of the previous table. ue or False: Under the average cost pricing policy, the cable company has no incentive to cut costs. True O False

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.
 
Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal Cost Pricing Average Cost Pricing Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Under the average cost pricing policy, the cable company has no incentive to cut costs. True False
Transcribed Image Text:Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. Complete the first row of the following table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal Cost Pricing Average Cost Pricing Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. True or False: Under the average cost pricing policy, the cable company has no incentive to cut costs. True False
Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. 100 90 80 70 60 - --- II 50 ATC X MC 20 10 MR D. 2 4 8 10 12 14 16 18 20 QUANTITY (Thousands of subscriptions) Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. PRICE (Dollars per subscription)
Transcribed Image Text:Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. 100 90 80 70 60 - --- II 50 ATC X MC 20 10 MR D. 2 4 8 10 12 14 16 18 20 QUANTITY (Thousands of subscriptions) Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. PRICE (Dollars per subscription)
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