Question 2 Refer to Scenario below to answer the following questions. The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P-55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR-55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household. 2.1) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how many households would it service? Working calculation: 2.2) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, what price would it charge per houschold per month? Working calculation: 2.3) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how much profit would it earn? Working calculation:

Question 2 Refer to Scenario below to answer the following questions. The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P-55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR-55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of RM5 for providing cable service to each household. 2.1) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how many households would it service? Working calculation: 2.2) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, what price would it charge per houschold per month? Working calculation: 2.3) If Fun Cable Company were to be awarded the exclusive right to provide cable service in Stratospheria, how much profit would it earn? Working calculation:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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