True or False: Because Vision Source faces falling long-run average cost over the relevant output range, it would be inefficient for another firm to enter this cable television market. True False

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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True or False: Because Vision Source faces falling long-run average cost over the relevant output range, it would be inefficient for another firm to enter
this cable television market.
True
False
Transcribed Image Text:True or False: Because Vision Source faces falling long-run average cost over the relevant output range, it would be inefficient for another firm to enter this cable television market. True False
Vision Source is a cable television provider. In the long run, Vision Source can provide cable television for 20,000 homes each month at a total cost of
$600,000, cable television for 30,000 homes at a total cost of $750,000, or cable television for 40,000 homes at a total cost of $800,000.
Use the purple points (diamond symbol) on this graph to plot points of the long-run average cost curve at outputs of 20,000, 30,000, and 40,000
homes.
AVERAGE COST (Dollars per home per month)
50
40
30
20
10
0
0
10
30
HOMES SERVED (Thousands)
20
40
50
Average cost
(?
Suppose that there are 40,000 households that purchase cable television in this area. All of Vision Source's potential rivals face the same long-run
average cost curve.
Transcribed Image Text:Vision Source is a cable television provider. In the long run, Vision Source can provide cable television for 20,000 homes each month at a total cost of $600,000, cable television for 30,000 homes at a total cost of $750,000, or cable television for 40,000 homes at a total cost of $800,000. Use the purple points (diamond symbol) on this graph to plot points of the long-run average cost curve at outputs of 20,000, 30,000, and 40,000 homes. AVERAGE COST (Dollars per home per month) 50 40 30 20 10 0 0 10 30 HOMES SERVED (Thousands) 20 40 50 Average cost (? Suppose that there are 40,000 households that purchase cable television in this area. All of Vision Source's potential rivals face the same long-run average cost curve.
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