Suppose a local cable company provides cable service to a rural community. The figure to the right illustrates the cable​ company's marginal cost of providing cable service along with the​ community's demand for cable TV. Assume the local cable company is a monopoly. When the company maximizes​ profits, consumer surplus equals $200, and producer surplus equals $_______. Compared to the perfectly competitive market outcome, the cable company creates a deadweight loss equal to $______.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Suppose a local cable company provides cable service to a rural community. The figure to the right illustrates the cable​ company's marginal cost of providing cable service along with the​ community's demand for cable TV.

Assume the local cable company is a monopoly.

When the company maximizes​ profits, consumer surplus equals $200, and producer surplus equals $_______.

Compared to the perfectly competitive market outcome, the cable company creates a deadweight loss equal to $______. 

Price and cost (dollars per cable subscription)
120-
110-
100-
90-
80-
70-
60-
50-
40-
30-
20-
10-
of
0
10
MR
D
MC
20 30 40 50 60 70 80 90 100
Quantity of cable subscriptions
Ⓡ
N
Transcribed Image Text:Price and cost (dollars per cable subscription) 120- 110- 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- of 0 10 MR D MC 20 30 40 50 60 70 80 90 100 Quantity of cable subscriptions Ⓡ N
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