The government of Beach Island is currently inviting investors to bid for the exclusive right to provide satellite television broadcast 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 service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Funtime TV Company is interested in bidding for the right to provide this service on Beach Island. It has a constant average and marginal cost of R5 for providing the service to each household. (Hint: Write your answers in R and no decimals). A. If Funtime TV Company were to be awarded the exclusive right to provide cable service on Beach Island, how many households would it service? B. If Funtime TV Company were to be awarded the exclusive right to provide cable service on Beach Island, what price would it charge per household per month? C. If Funtime TV Company were to be awarded the exclusive right to provide cable service on Beach Island, how much profit would it earn? D. At what level of output (number of households) is Funtime TV Companyʹs total revenue maximized?
2. The government of Beach Island is currently inviting investors to bid for the exclusive
right to provide satellite television broadcast service to its residents. The market
would subscribe to the service and P is the monthly fee charged to the subscribers.
The associated marginal revenue curve is MR=55-0.02Q. Funtime TV Company is
interested in bidding for the right to provide this service on Beach Island. It has a
constant average and marginal cost of R5 for providing the service to each household.
(Hint: Write your answers in R and no decimals).
A. If Funtime TV Company were to be awarded the exclusive right to provide cable
service on Beach Island, how many households would it service?
B. If Funtime TV Company were to be awarded the exclusive right to provide cable
service on Beach Island, what
C. If Funtime TV Company were to be awarded the exclusive right to provide cable
service on Beach Island, how much profit would it earn?
D. At what level of output (number of households) is Funtime TV Companyʹs total revenue
maximized?
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