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Short Run Pricing Mechanism Quantity (Subscriptions) Price (Dollars per subscription) Profit Long-Run Decision Profit Maximization 8,000 60 Positive Stay in business Marginal-Cost Pricing 16,000 20 Negative Exit the industry Average-Cost Pricing 15,000 25 Zero Stay or exit 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

Short Run Pricing Mechanism Quantity (Subscriptions) Price (Dollars per subscription) Profit Long-Run Decision Profit Maximization 8,000 60 Positive Stay in business Marginal-Cost Pricing 16,000 20 Negative Exit the industry Average-Cost Pricing 15,000 25 Zero Stay or exit 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

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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Short Run Pricing Mechanism Quantity (Subscriptions) Price (Dollars per subscription) Profit Long-Run Decision Profit Maximization 8,000 60 Positive Stay in business Marginal-Cost Pricing 16,000 20 Negative Exit the industry Average-Cost Pricing 15,000 25 Zero Stay or exit 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:Short Run Pricing Mechanism Quantity (Subscriptions) Price (Dollars per subscription) Profit Long-Run Decision Profit Maximization 8,000 60 Positive Stay in business Marginal-Cost Pricing 16,000 20 Negative Exit the industry Average-Cost Pricing 15,000 25 Zero Stay or exit 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
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