Scenario 15-7 Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its mark Let's assume that Black Box Cable pays $75,000 a year for the exclusive marketing rights to PMC. Since Black has already installed cable to all of the homes in its market area, the marginal cost of delivering PMC to subscri zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her prof Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers there are two types of subscribers who value premium movie channels. First are the 4,000 die-hard TV viewers will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to 2 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC. Refer to Scenario 15-7. If Black Box Cable TV is able to price discriminate, what would be the maximum amo profit it could generate? O $500,000 O $600,000 O $850,000 O $925,000 O None of the above

Scenario 15-7 Black Box Cable TV is able to purchase an exclusive right to sell a premium movie channel (PMC) in its mark Let's assume that Black Box Cable pays $75,000 a year for the exclusive marketing rights to PMC. Since Black has already installed cable to all of the homes in its market area, the marginal cost of delivering PMC to subscri zero. The manager of Black Box needs to know what price to charge for the PMC service to maximize her prof Before setting price, she hires an economist to estimate demand for the PMC service. The economist discovers there are two types of subscribers who value premium movie channels. First are the 4,000 die-hard TV viewers will pay as much as $150 a year for the new PMC premium channel. Second, the PMC channel will appeal to 2 occasional TV viewers who will pay as much as $20 a year for a subscription to PMC. Refer to Scenario 15-7. If Black Box Cable TV is able to price discriminate, what would be the maximum amo profit it could generate? O $500,000 O $600,000 O $850,000 O $925,000 O None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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